The minutes of the Bank of Japan indicate that the central bank has become more sensitive to the urgency of raising interest rates. These concerns are mainly driven by the weakening of the yen and its impact on inflation. Recent movements in the yen have challenged the downward trend in inflation, and one member emphasized that given the immediate priority of price stability, the bank should not spend too much time assessing the effects of rate hikes and should take the next step, a rate increase, without losing the appropriate timing. As a result, markets see a higher probability of an interest rate hike in April.

China’s Purchasing Managers’ Index (PMI) returned to contraction territory in January 2026. The manufacturing index fell to 49.3 and the services index declined to 49.4, indicating simultaneous weakness in both domestic and external demand. This decline has intensified doubts about the effectiveness of the government’s recent support measures and shows that China’s economy continues to face persistent challenges in household demand and the property sector.

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.

Following news of the negotiations, the exchange rate of the dollar against the rial declined and is now trading in the 150,000 toman range. These negotiations are taking place while the United States is deploying a large fleet of warships to the region and issuing threats against Iran. Trump has warned that if no agreement is reached, bad things could happen. The United States has announced three main demands: a complete halt to uranium enrichment, restrictions on the ballistic missile program, and an end to support for proxy groups in the region. Iran considers these demands unacceptable but has declared its readiness to show flexibility on the enrichment issue, including the handover of 400 kilograms of enriched uranium and a halt to enrichment within the framework of a consortium. Iran emphasizes the removal of preconditions and the withdrawal of U.S. military assets away from its borders.