Kevin Hass, an economic adviser to Trump, believes that the Federal Reserve should focus as much as possible on reducing the size of its balance sheet. In this context, he supported the selection of Kevin Warsh and said that Trump now believes the economy has experienced a positive supply shock. Reducing balance sheet assets could lead to consequences such as higher long term interest rates and reduced liquidity.

The Reserve Bank of Australia is likely to approve an interest rate hike to 3.85 percent this week, moving against the global trend. This shift in stance comes in response to stubborn inflation, an unexpected decline in the unemployment rate, and rising housing prices. This would be the first rate increase since November 2023. Stephen Miller, an investment strategist at GSFM, said, “Inflation is a clear risk, and addressing this risk now through an interest rate increase may be the most appropriate response. Failing to do so could require more aggressive use of interest rate tools in the future.” The final decision will be announced on Tuesday.

U.S. President Donald Trump announced that in exchange for the Indian Prime Minister’s agreement to stop purchasing oil from Russia, punitive tariffs on Indian goods will be reduced. Under this agreement, which was reached after a phone call between the two leaders, the overall tariff rate on Indian goods was reduced from 25 percent to 18 percent, and an additional 25 percent surcharge will also be removed. Trump claimed that India has reciprocally reduced its tariffs and non-tariff barriers against the United States to zero and will purchase more than 500 billion dollars worth of American products. Trump is also urging countries to buy oil from Venezuela instead of Iran and Russia, thereby putting pressure on his negotiating rivals.

The U.S. Bureau of Labor Statistics, BLS, announced that due to a partial federal government shutdown, the key January employment report will not be released as scheduled on Friday. Other labor market reports scheduled for this week will also be postponed. This shutdown occurred due to Congress failing to pass a budget. The January report, in addition to monthly data, was expected to include significant annual revisions to employment figures, which were anticipated to show that job growth in the year ending March 2025 was weaker than initial estimates. A new release date will be announced once government funding is secured.