The Federal Reserve announced a hawkish stance, projecting higher inflation and an elevated long-term neutral rate for 2025. This forecast triggered a global market sell-off, with major indices plummeting. The Nasdaq dropped over 3%, the Dow experienced its longest decline in 50 years, and the dollar reached a two-year high. Traders are now adjusting strategies to navigate the potential for no rate cuts in 2025.
Asian markets are particularly vulnerable as they grapple with the strengthening US dollar. The Bank of Japan is under scrutiny as it considers its response to the Fed's actions. Although interest rates are expected to remain stable, Governor Kazuo Ueda's statements will be closely watched. The global financial landscape is poised for significant shifts as central banks navigate this new reality