After hopes for a more hawkish Federal Reserve were dashed amid a breakdown in fundamentals, the latest interest rate decision and data, point to a more uneven outlook for the US economy. The FOMC opted to leave rates unchanged while striking a more dovish stance. Balance sheet reduction may begin this fall, however, the likelihood of another rate hike before the end of the year has been notably diminished. Apart from policy, GDP growth managed to come in-line with expectations of 2.60% during the second quarter. UK GDP growth was also announced last week, with the comparable figure tapering to 1.70% annualized pace of expansion during the second quarter despite a pickup in the quarterly pace to 0.30% versus the 0.20% recorded during the first quarter.
Moving on to Asia, Japanese unemployment fell to 2.80%, marking the lowest value in 22-years as joblessness continues to decline. Annualized inflation figures on a core and headline basis remained unchanged at 0.40% for June, staying well below the Bank of Japan’s 2.00% target. Australia also experienced an inflation disappointment after the figure cooled to 1.90% annualized growth during the second quarter, potentially thwarting efforts by the RBA to tighten policy as price growth falls beneath the 2.00-3.00% target.