Market Commentary: Friday 25th July

President Trump told reporters during his tour of the Fed that there is “no tension” with Fed Chair Powell and that it is not necessary to fire him. Trump also made it clear that lowering rates is a more pressing concern. Fed officials are widely expected to hold interest rates steady for the fifth time at the upcoming rate decision on July 30.

In Japan, the Tokyo Core CPI rose 2.9% year-on-year in July 2025, easing for the second straight month and falling below market expectations of 3%. The US–Japan trade deal has reduced a key source of uncertainty for Japan’s economy, and BoJ officials see potential for another rate hike this year. The BoJ has repeatedly indicated that a rate hike will occur as long as the economy and inflation remain in line with expectations. The JPY rose and is currently trading at 147.03; the Nikkei is on track for weekly gains of over 4%.

The ECB held interest rates in its decision yesterday as expected. ECB’s Kazaks said in an interview that there is little reason to lower rates and that “a steady-hand policy is appropriate.” The baseline scenario for the September meeting is another hold.

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