At the FOMC, a hawkish rate cut. The USD/JPY fell to as low as 155.79 yen.

【12/10Market Overview

In Tokyo time, the dollar/yen began higher, but as the Nikkei average fell into negative territory, it dropped to156.56yen. In European trading, the dollar/yen hovered around156.70yen with little movement.During NYtime,the FOMCdecided to cut the policy rate by0.25% (from3.50–3.75%). In its statement, it noted that “U.S. economic activity appears to be expanding at a moderate pace” and that it would evaluate the extent and timing of further adjustments to the target range for the federal funds rate while considering incoming data, progress, and risks. It also stated that it plans to begin purchasing short-term government securities as needed to keep reserve balances at sufficiently high levels. Also published alongside was theFOMCdot plot, showing that the rate cut is expected to occur once in both 2026 and 2027, and the longer-term (neutral) rate outlook was held at3.0%. Following the FOMC, markets reacted with higher stocks, lower yields, and a weaker dollar. The dollar/yen briefly fell to155.79yen.

Additionally, Fed Chair Powell said in a post-FOMC press conference that “inflation is still mildly high,” “the downside risk to employment appears to have risen recently,” “the FRB will decide at each meeting,” “the FRB is in a wait-and-see stance on the economy,” and that “many data points will be available before the next 1-month FOMC,” indicating a cautious approach to future policy decisions based on economic indicators.

【12/11Market View