While 11 of 12 Fed districts described “little or no” net change in employment compared with the prior month, seven districts described firms as “hesitant”, with two districts reporting a rise in layoffs.

Tariffs have been slow to pass through to higher inflation, with economists arguing that businesses are still selling merchandise accumulated before the import duties kicked in.

For now, markets see just a one-in-four chance of a rate cut by December but pricing goes above 50 per cent by early spring, suggesting that a debate on more easing is far from over.

It’s a double whammy for Asian economies, as they face higher US tariffs and competition from cheap Chinese exports,” said Dai-ichi Life Research Institute chief,

Himino said the BOJ should reduce its presence in the Japanese government bond (JGB) market as keeping excessive money in place unnecessarily could carry risks.

For the first time in years, international equities outpaced their US counterparts by more than 10 percentage points in the first half of 2025.

Christopher Waller again called for lower interest rates, saying he would support a quarter-percentage point reduction in September and anticipates additional cuts over the next three to six months.

The BOK said in a statement that it maintains its rate cut stance, but would hold rates for the time being as it monitors household debt risks and the impact of US tariffs.

A deflationary spiral that has eroded corporate pricing power in the world’s second-largest economy is one of the biggest reasons to doubt the sustainability of the current rally.

Another serious blow to the economy or a steep downgrade in the inflation outlook, though unlikely, could still convince officials to lower rates once more this year, they said.

All three indexes were bolstered after Mr Powell flagged the risks of higher inflation and a weakening jobs market at a central bankers conference in Jackson Hole, Wyoming.

The BOJ in 2024 exited a decade-long, massive stimulus and raised short-term interest rates to 0.5 per cent in January on the view Japan was close to durably hitting its 2 per cent inflation target.