Monetary Policy

The International Monetary Fund recommends that the Bank of Japan continue raising interest rates, despite new risks to Japan’s economy stemming from the Middle East war. Rising oil prices and yen depreciation have intensified inflation pressures. The IMF expects inflation to return to the 2% target in 2027 and emphasizes the importance of a flexible interest-rate policy.

A research report from China International Capital Corporation (CICC) notes that the Iran–U.S. conflict has pushed up oil prices, increasing inflation risks, affecting expectations for Fed rate cuts, and driving selling of gold ETFs. Geopolitical developments put oil prices at a crossroads, while the gold market is focused on how an economic downturn could affect it; in the future, it may reassess expectations for rate hikes. Demand for gold investment and prices may have room to rise.

Gate News update, April 3, Carson Group’s Chief Macroeconomic Strategist Sonu Varghese said that the latest labor data show that the economy’s new job growth is sufficient to keep pace with population growth. He noted that this will put the Federal Reserve in a more complicated position, making rate cuts pointless—especially given the size of the inflation shock that’s coming. He added that the inflation problem already existed before the Middle East crisis that sent energy prices soaring, and in the end, it appears that the rate cuts implemented last year were a mistake.

The U.S. job market saw significant improvement in March, adding 178,000 jobs and lowering the unemployment rate to 4.3%. This rebound follows February's losses, with potential implications for future interest rate hikes amid ongoing oil price concerns.

Gate News message, on April 3, market pricing shows that bets on the Federal Reserve cutting rates in 2026 have eased.

Gate News update: On April 3, according to CME's “FedWatch” data, ahead of the nonfarm payrolls release, the probability that the Federal Reserve will raise rates by 25 basis points in April is 0.5%, while the probability of keeping rates unchanged is 99.5%. The probability that the Federal Reserve will cut rates by a cumulative 25 basis points by June is 7.8%, the probability of keeping rates unchanged is 91.7%, and the probability of raising rates by a cumulative 25 basis points is 0.5%.

In March 2026, gold prices saw a sharp 12% pullback, prompting the market to reassess its structural risks. Goldman Sachs analysts said that trading was driven by margin imbalances and intensifying geopolitical conflicts, leading traders to close positions and sell off gold. Despite increased short-term volatility, institutions remain optimistic about gold’s medium- to long-term outlook, forecasting that the price could reach $5,400 by year-end. Future trends will be influenced by the strength of the U.S. dollar and the state of the global economy.

The European Central Bank plans to officially issue a digital euro in July 2029, and has already reached consensus on legislation. The digital euro is intended to strengthen financial sovereignty and reduce reliance on the U.S. payment system. Completing legislation by the end of 2026 will drive a 12-month pilot in 2027.

Goolsbee said that with the economy impacted by the shock from oil prices and inflation not yet having eased, rising oil prices could further worsen inflation expectations, bringing greater difficulties and slowing hiring. Companies are facing uncertainty.

Gate News, April 2, the Federal Reserve’s Logan said she supports the Federal Reserve maintaining interest rates unchanged at its recent FOMC meeting. She noted that the labor market has been moving toward stability from the second half of 2025 to this year.

Dallas Fed Chair Logan outlined several paths for the Federal Reserve to reduce its balance sheet, emphasized the effectiveness of the current liquidity management framework, and noted that regulatory adjustments can encourage banks to lower their reserve levels. She criticized that some liquidity rules have failed to improve safety and said that reserves could be used more efficiently.

The International Monetary Fund said in its annual assessment report that although U.S. inflation is expected to fall to the 2% target in the second half of 2026, the room for rate cuts this year is extremely limited—at most there may be one opportunity for a rate cut by the end of 2026. This will need to take into account changes in the labor market and the impact of commodity prices.

Legislator Ko Ru-jun proposed including Bitcoin and stablecoins in Taiwan’s foreign exchange reserves, believing their advantages are especially evident in extreme situations. Central Bank Governor Yang Chin-lung responded that, although his stance remains unchanged, he will continuously evaluate new developments. Globally, central banks generally adopt a conservative approach, believing that Bitcoin is not suitable as a reserve asset, and Taiwan’s progress in this area is unlikely to be realized in the short term.

Gate News message: On April 2, the People’s Bank of China added CITIC Bank, China Everbright Bank, Huaxia Bank, China Minsheng Bank, Guangfa Bank, Pudong Development Bank, Zheshang Bank, Ningbo Bank, Jiangsu Bank, Beijing Bank, Nanjing Bank, and Suzhou Bank as bank-type digital RMB business operating institutions, and they have been connected to the People’s Bank of China’s digital RMB system. After the newly added institutions complete business and technical preparations, they will carry out digital RMB business.

Rising U.S. consumer concerns about inflation pushed inflation expectations up to 6.2% in March, reaching a new high for 2025. Oil prices have broken above $100, which is expected to drive up the consumer price index, affecting economic activity and increasing pressure on the cost of living; it could also impact financial markets and investor sentiment toward crypto assets.

April 2, 2026, the total market capitalization of the cryptocurrency market fell 2.6%. Bitcoin dropped to $66,250, Ethereum is nearing $2,000, and major assets generally pulled back. Due to Trump making tough remarks about the Iran situation, risk-off sentiment intensified in the market, and funds are taking a wait-and-see stance in the short term. High interest rates and geopolitical risk together are weighing on prices; going forward, attention will be on developments in the Middle East and changes in macro liquidity.

In 2026, Russia will accelerate cryptocurrency regulatory reforms to address fiscal pressure. It plans to ban citizens from trading on platforms without local authorization and to strengthen taxation on licensed entities. Regulators intend to restrict access to overseas platforms through technical means, but industry insiders are cautious about the policy’s fiscal impact.

Trump recently said he would launch a fierce attack on Iran within the next few weeks. The market reacted strongly: the dollar rose while Asian stock markets fell. Nomura Securities warned that Asian currencies could weaken and that the risk of central bank intervention was increasing. Iran also countered Trump’s remarks, but they failed to ease tensions, and there has been no concrete commitment on the proposal to reopen the Strait of Hormuz. The United Kingdom plans to hold a diplomatic meeting to further negotiate.

On April 2, Paul Grewal, the Chief Legal Officer of a certain CEX, said in an interview that the debate over stablecoin yield in the United States’ soon-to-be released “CLEAR Act” is nearing an agreement. He emphasized that although there are disagreements, all parties recognize that other elements of the bill are just as important, and he is optimistic about the bill’s prospects. Grewal opposed conflating the issue of stablecoin yield with challenges facing the banking industry. The CEX and its CEO previously opposed a proposal to limit stablecoin rewards, saying it would harm innovation and consumers’ interests.

EDX Markets has recently applied to the U.S. Office of the Comptroller of the Currency to establish a national trust bank, aiming to integrate into the traditional financial system and provide asset custody and management services. Influenced by the Trump administration, crypto industry regulation has been moving toward openness, and many companies such as Circle and Ripple have already obtained similar licenses. With its unique positioning, EDX focuses on serving traditional financial participants, and hopes to improve its compliance and strengthen its competitiveness by obtaining that license.