International News 18 November 2025
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Fed Official’s Warning Jars Markets as Rate-Cut Expectations Fade
Financial markets in the United States swung sharply on Friday, 14 November 2025, after Kansas City Federal Reserve President Jeff Schmid warned that additional interest-rate cuts could reignite inflation rather than support a cooling labor market. Schmid argued that he sees “no significant benefit” from further easing to bolster employment and cautioned that premature cuts could undermine the Fed’s commitment to its 2% inflation target. His remarks swiftly reduced what had been near-unanimous market expectations of a 25-basis-point rate cut in December. The Fed now faces a familiar policy dilemma: balancing inflation control with its mandate to maintain low unemployment, which remains at 4.3% despite broader signs of labor-market softening. The central bank cut rates to 3.75%–4.00% in October, offering some relief to borrowers, yet households and businesses continue to struggle with elevated costs for food, rent, utilities, and care services. Annual inflation is holding at 3%, still above target, while the ongoing government shutdown has disrupted key data releases, forcing the Fed to rely on private-sector indicators. In this environment of limited visibility, any comments from Fed officials—including regional presidents like Schmid—carry outsized influence, prompting markets to reassess the likelihood and timing of future rate cuts.
Japan–China Tensions Over Taiwan Escalate, Triggering Economic and Diplomatic Fallout
Diplomatic tensions between Japan and China over Taiwan intensified as remarks by Japanese Prime Minister Sanae Takaichi sparked sharp reactions from Beijing, leading to early signs of economic impact—particularly in tourism and consumer activity. China announced that Premier Li Qiang has no plans to meet Takaichi during the G20 Summit in South Africa, while its Foreign Ministry accused the Japanese leader of “undermining the political foundation” of bilateral ties after she suggested Japan could respond militarily if China attacked Taiwan. Beijing demanded the comments be withdrawn and issued a travel advisory discouraging Chinese citizens from visiting Japan. Japan has since dispatched senior diplomat Masaaki Kanai to Beijing to clarify that Takaichi’s remarks do not represent a policy shift, stressing that communication channels remain open. Meanwhile, Taiwan warned that China is waging a “multi-front assault” on Japan, urging the international community to monitor the situation. Tensions escalated further after China summoned Japan’s ambassador and issued threats of severe consequences, while a social media post by China’s Consul General in Osaka fueled additional diplomatic friction. The situation was compounded by Chinese coast guard vessels entering waters around the disputed Senkaku/Diaoyu Islands, prompting Japan’s coast guard to intervene.
Thailand’s Economy Slows to Four-Year Low Amid Tourism Weakness and Political Uncertainty
Thailand’s economy grew just 1.2% in Q3 2025, marking its slowest pace in four years as tourism and manufacturing weakened against a backdrop of domestic political uncertainty and border conflicts. The result missed Reuters’ median forecast of 1.6% and fell sharply from 2.8% annual growth in Q2. On a quarter-on-quarter, seasonally adjusted basis, GDP contracted 0.6%, deeper than expectations of a 0.3% decline, following a revised 0.5% expansion in the previous quarter. The economy continues to struggle with U.S. tariffs, high household debt, and a strong baht, contributing to its lagging performance compared to regional peers. The National Economic and Social Development Council cut its 2025 growth forecast to 2.0%, down from an earlier 1.8%–2.3% range, and now projects 1.2%–2.2% growth for 2026. To counter the slowdown, the government has introduced stimulus measures, including a 44-billion-baht (US$1.3 billion) consumer subsidy program aimed at lifting growth above 2.2% this year. However, Prime Minister Anutin Charnvirakul faces limited time to execute these policies, with plans to dissolve parliament by late January ahead of general elections expected in late March.