Market Report.

💴 A few hours ago, the Bank of Japan raised its benchmark interest rate by 0.25 percentage points to 0.75%, the highest level in 30 years. This unanimous decision by the policy board, led by Governor Kazuo Ueda, signals the BOJ’s growing conviction that it can achieve its long-pursued 2% inflation target.

📊 This rate increase was widely expected. By raising rates to 0.75%, the BOJ is continuing its gradual withdrawal from the ultra-loose policies it has maintained for over a decade. There remains the delicate balance between economic stimulus via possible fiscal expansion of the new Japanese government, and inflation restraint of the BoJ, two forces that could oppose generating effects difficult to predict.

🇬🇧 The Bank of England has cut its benchmark interest rate to 3.75% from 4%, after a narrow 5-4 vote by policymakers. This marks the sixth rate cut since August 2024, as the BoE responds to a big drop in inflation and a forecast that the UK economy is stagnating. Governor Andrew Bailey changed his view and voted for the rate cut, as he sees inflation returning close to the 2% target as soon as April or May 2026, about a year earlier than previously forecast.

⚠️ Some BoE policymakers who voted against the rate cut remained more concerned about the risk of inflation proving stronger than expected. The BoE now expects the UK economy to stagnate in the last three months of 2025, down from a forecast of 0.3% growth made last month, though it sees underlying growth at around 0.2% per quarter.

💷 The rate cut takes the Bank Rate to its lowest level in nearly three years, though it is still almost double the European Central Bank’s equivalent rate.

🏦 The ECB also published yesterday its decision on interest rates, leaving them unchanged. No Immediate Rate Moves – Lagarde was clear that the ECB is not rushing into any rate decisions, with all options remaining on the table. She dismissed speculation about imminent rate hikes or cuts, emphasizing the bank’s readiness to act if conditions shift.

📉 European Central Bank officials believe the cycle of interest rate decreases will come to an end based on the latest GDP and inflation forecasts. Unless there is another huge shock, the deposit rate should be able to remain at 2% after eight reductions from a top of 4%.

💶 The ECB sees wage growth easing before stabilizing below 3% by late 2026. Lagarde signaled that 2026 could see significant progress on the ECB’s digital currency initiative, describing it as an “important moment” for the project.

🇺🇸 Another interesting data published yesterday, was an inflation rate in the US lower than expected, which animates the atmosphere on Wall Street, making things easier for the Fed next months.

📉 The U.S. consumer price index rose 2.7% on an annualized basis in November, less than the expected 3.1% increase. The core CPI, which excludes volatile food and energy prices, also increased less than expected, rising 2.6% over 12 months compared to the 3% forecast.

⏳ This report was delayed due to the U.S. government shutdown, which disrupted the data collection process. The October CPI release was also canceled. Investors viewed the tamer-than-expected inflation data as a sign the Fed may be able to ease monetary policy more than anticipated.

📱 TikTok CEO Shou Zi Chew announced that the company’s U.S. operations will be housed in a new joint venture entity called TikTok USDS Joint Venture LLC. The joint venture will be majority owned by American investors, including Oracle, Silver Lake, and Abu Dhabi-based MGX, each holding a 15% stake. ByteDance will retain almost 20% ownership.

🔐 The new entity will be responsible for protecting U.S. user data, ensuring the security of TikTok’s algorithm, content moderation, and software assurance. Oracle will serve as the “trusted security partner” in charge of auditing and validating compliance with national security terms. Sensitive U.S. data will be stored in Oracle’s U.S. cloud data centers.

🛢️ The oil market also seems to be on sale. Guyana now sees near‑daily oil tankers arriving to load crude — a striking shift for a country that produced no oil just a few years ago. Meanwhile, across the world in the United Arab Emirates, a long‑established exporter since the 1960s, ports are similarly busy. The UAE, OPEC’s third‑largest producer, exported more crude last month than it has in years, highlighting strong global demand and rising output from both new and traditional suppliers.

Geopolitics.

🇪🇺 The European Union has approved extending the freeze on Russian assets using emergency powers, a crucial step towards potentially tapping those funds to help Ukraine. To do this, EU has had to break its own democratic rules because, members like Hungary could veto the extension, potentially allowing Russia to suddenly regain access to their frozen funds, which are estimated to be as much as €210 billion. This was a desperate maneuver that exposes and depletes the system.

⚖️ The extension is seen as a way to address a key concern from Belgium, which houses most of the Russian assets at the Euroclear financial institution. Belgium had argued it could be on the hook to repay any loans made using the frozen funds.

🧨 Russia’s central bank has responded by suing Euroclear in Moscow and threatening the EU with global retaliation if it makes any use of the frozen funds.

📰 According to the US website Redpill Project, the Russian assets frozen in 2022 were never intended to be spent: they were a tool for exerting pressure and a political theater that assumed a US bailout.

💣 When Trump canceled US financial support for the war, those funds became the only war fund available; by resorting to them, Europe destroyed the legal framework that made Euroclear a reliable custodian, condemning its future to failure, as other international investment powers would no longer trust this institution with their money. This seriously damages the European financial system.

🔄 Europe seems to be considering a change of strategy. According to Bloomberg, French President Emmanuel Macron said Europe will need to find a way to directly re-engage with Vladimir Putin if current U.S.-led peace talks fail to produce a lasting agreement. Speaking in Brussels, Macron said that “either a lasting peace is reached” through ongoing negotiations, “or we find ways for Europeans to re-engage in a dialog with Russia — in transparency and association with Ukraine.” He added that “it will become useful again to speak to Vladimir Putin.”