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The Bank of Japan (BoJ) raised its benchmark interest rate by 25 basis points from 0.25% to 0.5% in an 8-1 vote on Friday, to its highest level in 17 years, with the yen strengthening modestly against the US dollar after the announcement
The European Central Bank and the Federal Reserve are due to meet next week as policymakers digest early moves of the Trump administration.
The Fed is expected to keep interest rates on hold but the larger story unfolding will be how the central bank confronts early moves by Trump that are likely to shape the economy this year, including demands the Fed continue lowering borrowing costs.
The services sector accounted for the drop in the PMI, with manufacturing expanding for the first time in seven months on hopes of "looser regulation, lower taxes and heightened protectionism" under President Donald Trump's new administration. But some worried that potential tariffs would "disrupt supply chains and impact sales, or stoke inflation."
There were also fears the U.S. central bank could adopt a more hawkish posture to deal with inflation.