Take Two: Fed divided over December rate cut; Japan unveils new stimulus package

What do you need to know?

US interest rates are likely to continue easing, though Federal Reserve (Fed) officials expressed “strongly differing views” over a possible December cut, the minutes of the latest meeting showed. The Fed lowered rates by 25 basis points (bp) in October to 3.75%-4.0%, its second cut this year, with one policymaker voting for a 50bp reduction and one for no change. All policymakers agreed that monetary policy “was not on a preset course”, the minutes showed. Elsewhere, global stocks endured further volatility amid ongoing concerns over technology company valuations. The MSCI World, S&P 500 and Nasdaq each fell 3% in the week to Thursday’s close.*

*Source: FactSet, in US dollar terms. Data as of 20 November 2025.

Around the world

The Eurozone economy is expected to grow at a slower pace next year than previously anticipated, as ongoing trade policy uncertainty weighs on activity, according to a new forecast from the European Commission (EC). It now predicts 1.2% growth in 2026, slightly down from its spring forecast of 1.4%. However, a surge in exports ahead of tariff increases prompted the EC to lift its 2025 forecast to 1.3% from 0.9%. Separate data showed the bloc’s annual inflation rate eased to 2.1% in October from 2.2% in September. Core inflation, excluding energy, food, alcohol and tobacco, remained unchanged at 2.4%.

Figure in focus: ¥21.3trn

Japan’s Prime Minister, Sanae Takaichi, announced a ¥21.3trn ($135bn) stimulus package to boost economic growth and tackle rising inflation. The package includes household energy bill subsidies and local government grants as well as plans to increase security spending. Japan’s headline inflation rose slightly to 3% in October from 2.9% in September, while core inflation, excluding fresh food, also rose to 3% from 2.9%. Separate data showed Japan’s economy shrank 1.8% in the third quarter (Q3) on an annualised basis, a sharp reversal from Q2’s 2.3% growth and the first decline in six quarters. However, it was less than the 2.5% contraction the market had been expecting.

Words of wisdom

Low carbon steel: Steel manufactured through processes that emit less carbon than conventional steel making. A new mine in West Africa, Guinea’s Simandou, is expected to have a significant impact on the steel market - considered the largest iron ore mining project in history, its deposits contain a higher-than-average iron content. The superior grade requires less energy to process, meaning it could be used to produce low-carbon steel, a key part of the energy transition as many technologies including electric vehicles and wind turbines use the material.

What’s coming up?

Monday sees Germany publish its closely watched Ifo Business Climate index, followed by its final estimate for Q3 GDP growth on Tuesday - the previous estimate came in at 0.3% year on year. Wednesday sees the UK government deliver its Autumn Budget while on Thursday the Eurozone reports its latest Consumer Confidence and Economic Sentiment measures. On Friday, Canada and Japan respectively update markets with Q3 GDP growth and unemployment data.