The week ahead

Today is the 27th day of the year. January is 87% done, Q1 is 30% complete, and we’re 7% of the way through 2025. Trump has been in office for less than a week, but already he looks more purposeful and uncontained with what he says and does. It’s going to be a wild ride. 

> PH:  Our only bit of scheduled news comes on Thursday when the Philippine Statistics Authority releases our Q4 GDP number. Our government recently lowered the top-end of its full-year FY25 GDP prediction to 6.5% from 7.0%.

> International:  The big daddy of all data points is coming to us on Thursday morning, courtesy of the US Federal Reserve’s first decision on rates since Trump took over as president, and he has wasted no time in “demanding” that the Fed’s Chairman, Jerome Powell, lower interest rates “immediately”. 

MB BOTTOM-LINE:  While the president appoints the Fed’s Chairman and nominates its governors, the Chairman’s term is a fixed four-year term that doesn’t serve at the pleasure of the president. Mr. Powell was appointed and confirmed for his current term in May 2022, so according to the regular rules and norms, Trump will be unable to simply replace Mr. Powell to get his way on rates. Until 2026, that is. Then all bets are off. The sentiment is that the Fed will hit “pause” on lowering rates to gain the benefit of more data at this unsteady moment. Trump’s bluster on sweeping tariffs against its top trading partners could have far-ranging consequences that could make whatever the Fed does now seem fooling in retrospect. The Fed doesn’t meet again until March, but as we saw with the inflation crisis, central banks can convene emergency sessions to make adjustments to rates mid-cycle. It’s just a common thing.

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