ECB's Inflation Target, Russian Gas Crisis, and Trump's Impact on Asian Markets: Latest Developments in Global Markets
As we enter 2025, the global economy is shaped by inflation targets, energy crises, and the impact of new policies on the markets. European Central Bank President Lagarde indicated that they are making progress towards inflation targets, while the halt of Russian gas shipments to Europe has shaken energy markets. Asian stock markets face uncertainties stemming from Trump's new policies.
ECB President Lagarde: "The European Central Bank's 2% inflation target is approaching" ECB President Christine Lagarde stated that significant progress has been made in reducing inflation in 2024. She expressed hope that 2025 will be the year the ECB reaches its 2% medium-term inflation target, emphasizing their commitment to sustainably achieving this goal. Although consumer price growth in the Eurozone showed a downward trend throughout last year, it has seen a resurgence in recent months. Lagarde mentioned that inflation could fluctuate at current levels, describing the 2025 agenda as a "large and heavy agenda." She added that this program includes the redesign of the digital euro and eurozone banknotes.
Europe faces the risk of losing 30% of Russian gas As of January 1, natural gas shipments from Russia to Europe via Ukraine have completely halted. Kyiv's decision not to extend the agreement could lead to the European Union losing approximately 30% of its pipeline gas imports from Russia. Experts speaking to TASS indicated that 15-20 billion cubic meters of gas have been transported to Europe through the Ukrainian gas pipeline system over the past three years. Without the Ukrainian route, Russia's annual gas exports to the EU may drop to 39 billion cubic meters. In 2024, transit through Ukraine exceeded 15.4 billion cubic meters.
China's Central Bank may delay reserve requirement ratio cut The People's Bank of China (PBOC) may delay its decision to cut the reserve requirement ratio after injecting $233 billion in cash last month. Officials aim to leave room for new stimulus policies while providing a large amount of liquidity to the market by the end of 2024. The central bank is expected to reduce the reserve requirement ratio in the first quarter of 2025 to release additional cash into the market. However, analysts note that the impact of last month's record liquidity injection is still being felt and is helping stabilize the market.
Continued rise in prices and wages expected in Japan Japan's economy is expected to show stable growth in the fiscal year 2025. Private sector think tanks predict that wage increases and rising consumer prices will support economic growth. Economists suggest that the Bank of Japan (BOJ) is likely to raise its policy rate to between 0.75% and 1%. However, uncertainties arising from the potential return of U.S. President Donald Trump are cited as risk factors.
Minimum wage in Russia to increase by 16.6% In Russia, the monthly minimum wage will be increased by 16.6% to 22,440 rubles ($226.4) in 2025. This increase is expected to directly benefit the salaries of approximately 4.2 million workers. The minimum wage, which was previously 19,242 rubles in 2024, is applied before income tax. The new rate aims to enhance the purchasing power of employees.
Bank of Korea Governor: "Flexibility in monetary policy is necessary" Bank of Korea Governor Rhee Chang-yong emphasized the need for a more flexible monetary policy in 2025 due to rising economic uncertainties. Rhee stated that economic conditions are becoming increasingly challenging. Pointing out the high levels of political and economic uncertainty, he stressed that monetary policy should be implemented with an agile and flexible approach, which is critical for the sustainable growth of the South Korean economy.
Pessimism prevails in Asian markets due to Trump effect Asian stock market investors are facing a pessimistic atmosphere at the beginning of 2025 due to U.S. President Donald Trump's proposed increase in tariffs. Strategists foresee that Asian stocks may lag behind U.S. markets. The MSCI Asia Pacific Index rose by 7% in 2024, while the S&P 500 Index in the U.S. recorded a 23% increase during the same period. Experts highlight that Trump's "America First" policies could have adverse effects on Asian markets.