Fed Dilemma: Rate Hikes Before Cuts?

Despite resilient US services sector activity, persistent inflationary pressures and a softening labor market point toward growing stagflationary risks.

Meanwhile, unprecedented currency joint action by US Treasury Secretary Scott Bessent and Japanese authorities has temporarily checked dollar-yen volatility, even as markets grapple with Federal Reserve Chairman Kevin Warsh’s reduced-communication strategy and China’s widening domestic-export economic divide.

Vishnu Varathan, Head of Economics & Strategy at Mizuho Bank, joins BFM’s Market Watch to navigate these global market dynamics.

He evaluates whether the Fed may be forced to hike interest rates before cutting them, analyses the fair value baseline for the Japanese yen, and explains why a "policy bazooka" remains elusive for China's domestic economy.

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