U.S. jobless claims drop, BoJ split on rate hike

U.S. jobless claims edge lower

The number of Americans filing for unemployment benefits fell by 4,000 to a seasonally adjusted 218,000 in the latest week, below analysts' expectations of 225,000, marking a fresh four-month low. Despite the decline, the total remained above levels seen earlier this year, indicating that the labor market is holding steady amid signs of broader economic resilience.

U.S. Q2 GDP growth stands firm at 3%, reaffirms robust recovery

The U.S. economy expanded at an annualized rate of 3.0% in the second quarter of 2024, according to the latest data from the Commerce Department, holding firm from the prior estimate and significantly outpacing the 1.6% growth recorded in the first quarter. The upward revision in private inventory investment and federal government spending was offset by a downgrade in nonresidential fixed investment and exports, painting a mixed picture of underlying economic momentum. The steady growth underscores a solid footing for the U.S. economy despite a challenging global environment.

BoJ minutes show divisions on rate hike

Minutes from the Bank of Japan’s (BoJ) July meeting revealed a split among policymakers on the appropriate timing and pace of future interest rate hikes, highlighting the challenges the central bank faces in navigating monetary policy amid shifting economic conditions. The BoJ raised its short-term interest rate to 0.25% by a 7-2 vote, but dissent emerged on how aggressively to proceed with further tightening.

One policymaker argued that if inflation follows the bank’s projections, additional tightening would be “necessary.” Another suggested that with price pressures expected to reach target by the second half of fiscal 2025, a gradual approach toward the neutral rate—estimated at around 1%—would be prudent, stressing the need to avoid abrupt increases that could shock the economy.

Conversely, some members warned against hastening the pace of normalization, cautioning that it should not be “an end in itself” and advocating for close monitoring of risks stemming from policy shifts. Inflation expectations “are not yet anchored at 2%,” one member noted, signaling the need to guard against excessive speculation about future rate moves.

The minutes also underscored “high uncertainties” surrounding Japan’s neutral interest rate, given the prolonged period without any rate hikes. One official cautioned against rigidly adhering to estimates of the neutral rate and called for greater flexibility in adjusting policy to reflect evolving economic conditions.