Interest Rates Remain Unchanged, the World Wobbles—The "Seesaw of Stagnation" Created by 150 Days of the Trump Administration

1. The New Normal of "Interest Rate Limbo"

The global economy has entered a **"limbo" of neither low nor high interest rates**. This phrase, reported by Bloomberg on June 16, succinctly captures the confusion among central banks just days before President Trump's 150th day in office. The Federal Reserve, Bank of Japan, Bank of England, Norges Bank, and others among the ten major currencies are holding meetings this week, but the market has already priced in a "unanimous hold."ndtvprofit.com

The biggest factor pointed out in the article isthe re-escalation of tariffs by the Trump administration. Additional tariffs imposed since April have reignited supply chain disruptions, prompting the OECD to revise the global growth rate downward from 3.3% to 3.0% on June 3, warning that "protectionism is driving up prices."ndtvprofit.com

2. United States: The Gap Between Rate Cut Expectations and Reality

The Federal Reserve is expected to hold the policy rate at 5.25–5.50% at the FOMC meeting on the 19th. According to a Bloomberg economic survey, the median expectation is for a "single 25bp cut within the year." However, the bond market is still pricing in "50bp within the year," and the gap continues to widen. Chairman Powell is expected to emphasize "data dependency" at the press conference, but if high energy prices persist, the room for easing will narrow further.ndtvprofit.comft.com

On X, U.S. economic analyst Christophe Barraud posted "the market is dreaming too much," recording over 50,000 impressions.

3. Japan: Searching for a "Soft Landing" from Unprecedented Easing

The Bank of Japan is expected to hold a policy meeting on the 18th, maintaining the negative interest rate (-0.1%) while making slight adjustments to the pace of government bond purchases. Governor Ueda is likely to forgo additional rate hikes citing "unmet inflation targets," while maintaining a stance of preserving a real zero interest rate even after the removal of the 1.0% cap on long-term interest rates under YCC. The yen has appreciated by 7% since the beginning of the year, and for the Ministry of Finance, which is refraining from currency intervention, avoiding rate hikes becomes the "last shield."ndtvprofit.com

4. Europe: Middle East Risks and Energy Inflation

In Europe, the ECB implemented a 0.25% rate cut in early June, but there is little room to backtrack. Brent crude oil temporarily rose to $78 following Israel's attack on Iran's nuclear facilities. ECB Vice President de Guindos stated in a Reuters interview on the 16th that "additional rate cuts will be heavily influenced by trade conditions."reuters.com

The BOE is also expected to hold at 4.25% on the 20th. The Swiss National Bank is expected to make a slight cut to 0%, and the Riksbank to 2%, but many voices, including from HSBC in the UK, suggest this is "more about curbing currency appreciation than recession measures."ndtvprofit.com

5. Emerging Markets: Observing While Developed Countries Remain Stagnant

Countries like Brazil (Selic 14.75%), Chile (5.0%), and Indonesia (6.0%) are also maintaining their interest rates, citing "assessment of policy effects" as the reason. Only Turkey has an ultra-high interest rate of 46%, which is a desperate measure to explore "alternative means" of monetary easing.ndtvprofit.com

6. Social Media Sentiment

• Hashtag #RateLimbo trended in the US, Europe, and Japan from the night of the 15th.

• Analyst Neil Sethi lamented, "Interest rates remain unchanged, and investment appeal is weak," with 12,000 reposts.x.com

• Economic journalist Zoe Schneeweiss posted sarcastically, "The simultaneous central bank meetings are the 'Global Financial Super Tuesday'."

In the Japanese-speaking sphere, a tweet stating "If the Bank of Japan doesn't move, mortgage rates will bottom out" spread widely, causing access to mortgage comparison sites to surge to 180% of normal levels (according to SMBC Consumer Finance).

7. Implications for Japan

7-1 Mortgage and Corporate Bond Markets

Since variable loans are linked to the short-term prime rate, they won't immediately rise, but the fixed 10-year rate has already begun to increase by 0.05-0.1%. Companies are also advancing the issuance of 5-year corporate bonds since May. Many financial officers are saying, "Now is the last chance before interest rates rise."ndtvprofit.com

7-2 Exchange Rates and Export Companies

While the pressure for yen appreciation continues, if the US-China trade friction prolongs, ASEAN and India will expand as "third export destinations" for Japanese companies. Since they cannot enjoy exchange gains in yen terms, geopolitical diversification becomes essential.

7-3 Individual Investor Strategies

• Possibility of JGB yields returning to the 0.9% range → Demand for government bonds among principal safety proponents

• Buying foreign currency-denominated MMFs taking advantage of yen appreciation → However, be cautious of increased hedging costs

• Gold prices remain high in dollar terms → Wait for the overvaluation to resolve with yen appreciation for strategic buying

8. How to Get Off the "Stagnation Seesaw"

The reason central banks cannot act is due to the contradiction of "inflation being too strong, while the economy is too weak."dilemma. However, prolonged interest rate freezes expand credit bubbles and increase the risk of exacerbating the next financial shock. Bloomberg economists present a scenario where "if crude oil rises back to $90, a global simultaneous 'technical recession' could occur in early 2026."ndtvprofit.comft.com

References & Sources

• NDTV Profit “Global Rate Limbo Reigns After 150 Days Of Trump” June 16, 2025 ndtvprofit.com

• BusinessMirror/Bloomberg Reprint of the Same Article June 15, 2025 businessmirror.com.ph

• Financial Times “Israel-Iran tensions test central banks’ appetite for rate cuts” June 17, 2025 ft.com

• Reuters Interview “ECB Vice-President de Guindos” June 16, 2025 reuters.com

• X (formerly Twitter) Posts June 15-17, 2025 x.comx.comx.com