Daybreak Weekend: US Tech, UK Budget, BOJ Decision

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This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, we look to the next monetary policy decision from the Federal Reserve, along with more key tech earnings in the U.S. I'm Nathan Hager in Washington.

I'm Caroline Hipka in London, where we're looking ahead to the UK budget, with Britain's government trying to avoid a bond market reaction.

I'm Doug Krisner, looking ahead at the challenges facing the Bank of Japan.

That's all straight ahead on Bloomberg Daybreak Weekend. On Bloomberg 1130 New York, Bloomberg 99.1 Washington DC, Bloomberg 92.9 Boston, DAB Digital Radio London. Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App.

Good day to you.

I'm Nathan Hager. We begin today's program with an October decision from the Federal Reserve. Kevin Warsh and company begin their latest two-day meeting on Tuesday ahead of the monetary policy decision on Wednesday. For more on what to expect... We're joined by Michael McKee, Bloomberg International Economics and Policy correspondent, who I think is going to be in Washington, as usual, for the decision. Am I right, Mike?

I wouldn't miss it.

Well, there you go. But the market is thinking that the Fed is probably going to miss making another move on interest rates. What are the chances that we actually get a surprise move from the central bank this week?

They'd be pretty small. The most of the Fed officials, especially the voting ones, have said that they can afford to wait. And Kevin Warsh in his appearance last week did not give anybody any reason to doubt that. He didn't say much, but it's sort of what he didn't say that matters. And so at this point, the markets have priced in absolutely nothing happening. And if they do did raise rates, then that would make it difficult for Kevin Warsh in his news conference because he'll have to explain why they did and why they did when they led the markets to believe that they wouldn't. Now, he's going to have a tough enough job explaining why they waited, but it would be even harder if they'd raise rates.

Yeah.

Well, let's talk about the difficulty for this central bank because we have seen, as we've been talking about, price pressure's staying elevated for so long now. And with energy prices going back up as well, that's got to put some pressure on the Fed as well, doesn't it?

It certainly will. And we should have some dissents to the idea of doing nothing. Beth Hammack from Cleveland, Lori Logan from Dallas have already said that they think we need to be raising rates right now. So the fact that they don't will show there's some division on the Fed. The idea was that They want more data after they've raised rates once. But it doesn't look like the data that we're getting is going to be any better. So for Warsh, it's going to be kind of a real challenge to explain to the markets and the American people why they held off if they think inflation is still such a problem and it's going in the wrong direction.

Well, one thing we have heard from Warsh in the past is that he likes to look at the trend as opposed to month-by-month data. What does the trend look like when it comes to inflation?

The trend is not your friend, to use the old cliche. They target, of course, the Personal Consumption Expenditure Index, PCE index for inflation. Their 2% target is the headline number for that. Everybody also looks at the core because obviously we know what's going on with gasoline and energy prices, and that's not something the Fed can fix. But if you look at the core, one of the arguments was that they were making progress because on a three- and six-month basis, the annualized rate of inflation was dropping. But this month, economists have already figured out what the PCE is going to show. It's going to show that the three- and six-months annualized rate is rising and rising somewhat significantly.

So the trend is going in the opposite direction from what they're looking for.

Is the trend moving in that direction because of energy prices or are there other factors at play?

In the headline, it's energy prices. It's also food prices because we're starting to get the results of the closure of the Straits of Hormuz and the fact that fertilizers ingredients couldn't move through there. So farmers had to pay a lot more for fertilizer. We're seeing prices go up in supermarkets, but we're also seeing in the core rate that services prices are rising somewhat significantly. In part, what we're seeing is the margins, the way they calculate in the PCE, in the producer price index, which feeds into the PCE, is margins for wholesalers and retailers. And those have been widening because those companies are raising prices. And so at this point, it's not just energy. It's a bunch of other things as well, especially in the services area.

Thank you for this, Mike. Good to have you with us. That's Bloomberg International Economics and Policy Correspondent Michael McKee. Let's take a look now at some stocks making news in the week ahead. I'm Nathan Hager. Joined by Bloomberg Intelligence Global Head of Tech Research, Mandeep Singh, because we do have another very busy week for tech earnings in the days ahead. I think we're going to hear from, what, three of the MAG-7 this week, Mandeep.

Is that right?

Yeah, yeah.

So which are the most important ones for you, as I think we're hearing from Alphabet, Microsoft, and Amazon this week?

Agreed. And look, I think what we saw from SpaceX and Meta was that they are looking to raise their CapEx in a big way. SpaceX actually gave the numbers, but Meta didn't. And when I extrapolate that to what we can expect from Microsoft and Google and Amazon, it's very obvious that CapEx numbers will be revised higher. Now, the difference will be that All three of them will talk about how they expect cloud segment growth to accelerate. Remember, these are the three biggest hyperscalers when it comes to cloud infrastructure. And what we have already started to see is their growth rates are accelerating. And this quarter will be another proof point of that. And that will be the basis for them to increase their CapEx for next

year and possibly 2028.

Is that going to be something that's well received by investors? You mentioned the SpaceX forecast, and we saw a pretty big stock jump there. But when Meta Platforms announced that they were raising their CapEx forecast, the stock got punished pretty badly.

Yeah, and Meta did not give the specifics in terms of how much are they looking to raise CapEx and what kind of equity issuance or debt issuance they're looking to do. But the difference is Meta doesn't have a cloud infrastructure business. So that's where all these three companies, which have a combined backlog of over $ 1. 5 trillion, if you add up the backlogs of Microsoft, Azure, Google Cloud, and Amazon AWS. It will be north of 1.5 trillion already, and a lot of it is coming from the two frontier labs, OpenAI and Anthropic, but there is no doubt that in terms of monetization, these three hyperscalers are at the forefront of monetization because of their scale in cloud infrastructure, and I think that will be the big difference. If

they're able to show a significant acceleration in cloud business with holding margins steady, which has been the case so far. I think the stock reaction will be different from what we saw with Meta.

So how do you see the horse race now, Mandy, between Google Cloud, Microsoft Azure, and Amazon Web Services?

So Amazon AWS used to have almost a 50% market share in the traditional cloud world. Now, with all the new clouds coming to the scene, which are specializing in these AI data centers, that market share has dropped. So clearly, you know, Amazon AWS is not 50 percent. It's much lower. And you have got a long tail of new clouds that are growing very fast in the AI data center world.

Among the hyperscalers, I feel Google Cloud has taken a leap forward in terms of growing its market share relative to Amazon, partly because of their vertical integration with TPUs and what they're able to do with their own infrastructure stack where they have got everything from chips to models to the cloud infrastructure. And they're doing it at the lowest cost. So that will be a big differentiator in terms of Google Cloud margins. And Amazon AWS does have its own chips, but Google Cloud right now has a bigger scale and it's reflected in Anthropix leaked numbers in terms of their $ 750 billion commitments. About one-third of that go to Google. So from that perspective, also, Google has the most backlog from Anthropic, and I think that may

help their faster growth.

Now, what about Microsoft Azure? You mentioned Anthropic's $ 750 billion spend and maybe Google Cloud being a big part of that. Is Microsoft Azure going to be a beneficiary of that as well?

Yes, all three of them. In fact, Amazon and Google is where Anthropic has mostly deployed its infrastructure so far. But going forward, they do have over $ 100 billion commitment with Microsoft Azure as well. So Like I said, all these three clouds will benefit. It's just a question of whether Google Cloud will go 90% and Amazon AWS will grow slightly lower. But all three are growing in this case.

Are high double-digit growth expectations enough for investors at this point, Mandeep?

They are given the scale of these businesses. I mean, Google Cloud is already north of $ 100 billion. And if they're growing 90%, that's a stellar growth rate. Even for Amazon, which is $ 150 billion business, growing 40% is a very impressive growth rate. And it shows the ROI when it comes to all this huge CapEx spend that we are talking about. And that's what I meant These companies have the revenue to show for the CapEx. In the case of Meta, the revenue will come. It's just not there right now, and it's going to test investors' patience.

So then, after all the jitters that we've seen in the AI trade, depending on which company reports earnings from one day to the next, what are your expectations in terms of whether these reports this coming week are going to underpin the AI trade or maybe add to some more of those jitters?

I think that may calm some of the fears that we have seen around monetization and obviously the neocloud bond yields going up. So these companies have some of the best credit in terms of the ratings and they have a lot of firepower when it comes to issuing debt and raising their capex. And if they are able to show commensurate ROI on that capex spend without having the investors to wait for when the returns will show up, I think that will be cheered.

Thanks for this, Mandeep. Always good to get your thoughts on tech. That's Mandeep Singh, Global Head of Tech Research at Bloomberg Intelligence. And coming up on Bloomberg Daybreak Weekend, we'll look ahead to the UK budget with Britain's government trying to avoid a bond market reaction. I'm Nathan Hager, and this is Bloomberg. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Nathan Hager in Washington. Later in the program, we'll look ahead to a monetary policy decision from the Bank of Japan. But first, the UK's annual budget comes out this Wednesday. Officials have been watching the global bond sell-off and fiscal perils from nearby France. With

memories of recent fiscal blow-ups front of mind, Britain's government is keen to avoid another disaster. Let's get more now from Bloomberg Daybreak Europe anchor Caroline Hepger in London.

Do no harm. That's the message coming from the UK government about its annual budget. This year has seen political turmoil and this Wednesday is the first time that we'll hear what the new Prime Minister Andy Burnham's tax agenda actually looks like. Bloomberg spoke to the man giving the budget speech, Chancellor John Healey, earlier this month at the IMF.

about his priorities.

We all want growth to be even stronger in the face of these deep economic shocks that people are seeing around the world. Nevertheless, the British economic growth is proving resilience and my job as Chancellor, my responsibility as Chancellor, is to protect that resilience in the British economy and that's what my budget will do.

So there are two ways to cut a budget deficit.

One of them is to increase revenue and one of them is to cut spending. Which lever do you.

Want to rely on?

The Prime Minister and I have been both very clear from the outset. We have to control spending. It has to be part of a plan to bring down the deficit, bring down the high borrowing costs that previous governments left Britain with. And that's the way, in the end, that we underwrite the promises that any government underwrites the promises it makes to its people.

That was Chancellor John Healey there. Joining us now, Phil Aldrich, our senior UK economy reporter, and Matt Barney, our Bloomberg Economics UK economist. Welcome to both of you. Look, I'd just like to start by thinking about the state of the UK economy, Matt. If we start there, just ahead of the budget in a few days' time from the new Chancellor, John Healey, just give us a bit of the background firstly.

So, I mean, we've seen since the Iran war, clearly, it's been kind of a difficult inheritance for Burnham and Healey. So, interest rates are much higher than they were. We also know inflation is running hotter than expected. So, that is going to squeeze the public finances. Higher inflation in particular will push up welfare spending. And we know that the rise in interest rates is going to add to the borrowing costs that the government faces from their substantial debt bill.

In terms of what we're expecting then, I mean, John Healey is the new chancellor, but of course, this is the Labour government's third budget, in fact, Phil. So again, I'm sort of going to ask you something quite simple. What are we expecting from Healey? What is the backdrop in the UK from your perspective?

So as Matt said, the Iran war kind of looms over everything here in the UK, as it does everywhere. But his sort of primary goal, as he calls it, and as the Prime Minister Andy Bernanke is to give people breathing space. So the issue they've got to address is cost of living. And there's two counts of that.

There is the household cost of living and there's business cost of living. Business cost of living, if we recall, has become more constrained simply because taxes have gone up so much over previous budgets. So they're alert to that. But they've got to do something in this budget to address those issues of rising inflation. those issues of energy costs on household bills. And also, you know, they also say they're going to do something to help relieve the burden of these costs on businesses as well, so that the economy can continue to flourish, which at the moment has been remarkably resilient, actually, compared with where we thought the economy would be at the start of the year, once the Iran war had been launched.

Yeah, absolutely.

It has shown some resilience, hasn't it? And Also, in terms of sort of consumer business confidence had that bounce over the summer, it's come down a little bit since then. But growth has actually been quite strong, hasn't it? Sort of relatively. Matt, in terms of what we're actually expecting to hear from the charts, let's just go through a few of the details. There's not been as much speculation about this 2026 budget as there had been previously in Rachel Reeves' last budget in the UK.

Yes, we've certainly seen less leaks. So we have perhaps less of a clear picture of what could be coming than we might have done in the past. As Phil says, certainly the centrepiece of this budget is going to be energy support. So the question is really how generous is that support? We think it will be best designed to be targeted and temporary to limit the inflationary impact and limit the potential cost to the government. Ideally, as well, the measures they implement would suppress prices rather than boost income.

So one example of a price-suppressing measure is the VAT cut on electricity bills that was already implemented versus just giving handouts to households, for example. By implementing price-suppressing measures, they're more likely to effectively make the Bank of England's job easier rather than harder.

In the last few days, I've been speaking to the former chief economist at the Bank of England, Andy Haldane, and fascinating how much he and he points out, you know, even the political parties in the UK have picked up now on a much bigger dividing line, it would seem, between the left-leaning party, the Labour Party and the Conservatives about basically the argument returning to an old one, which is larger state, more spending versus you know, smaller states, less spending tax cuts, but the difficulty in the backdrop, regardless of the fiscal position in the UK, I want to feel what you think is going to be in this budget, because actually, one of the big things that we hear, again, and again, is that people don't think

this is going to be as large a budget as the very significant tax raising budgets we've had in the last two years in the UK. So is it going to be, you know, a smaller budget, maybe a beige budget, as one investor told me not that long ago. What do you think might be in the budget in terms of measures?

So Andy Haldane added to his conversation with you with some comments today saying he thinks it should be a do no harm budget, which is another version of beige.

Sure.

But so, I mean, as Matt says, it seems nailed on that we're going to get a bank tax. I And then it looks like there's going to be some kind of online sales tax for the big warehouses, the Amazons and the big tech retailers. They want to reduce the burden of business rates on high streets. So we're likely to see that could be, you know, the sheds fork out, these big online warehouses fork out to support the society, as it were, on the high street, just sort of the general feeling, because he's very much into his vibes, isn't he, Andy Burnham? So You know, the general sense that your community has got some vibrant, you know, heart, some vibrant sort of high street center. Other than that, I mean, as we've talked about, there'll be still be

we don't know exactly how much, but there's going to be support for households. And as I say, that's going to be central to to this. It's not it's it does feel at the moment like this isn't this isn't going to be a big budget in terms of policy measures. The sort of backdrop to the whole thing is Burnham and Healy's vision for the UK, which is devolution. So they want to move power out of Westminster into the regions so that... And we are going to see some of the tax which is raised in those regions, so income tax and business rates, which is raised in those regions, which is normally just then handed back to central government and then is handed back from central government in forms of grants to those regions. They're going to keep some

of that. So it's... the idea is it incentivizes those regional governments to, um, to take growth enhancing policies because the more growth they get, the more revenue they get, and the more of that they get to keep. Um, so they get richer as a, as a region. So, so we're going to see that. I mean, in terms of other tax measures, I just, I wonder personally where the council tax may be targeted because that is a regional measure where you're, you're handing more power to, to local government. Um, uh, and they could, they could raise tax by more should they need to. And if, if, if the central government doesn't want to bear the burden of that they can say look this is the responsibility of local government so it's not centralised so don't blame

us gov kind of thing but it does definitely feel like it's not at the moment it's not going to be a huge budget in terms of policy measures and I think that's what markets and business wants they do want this do no harm budget they do want this beige budget so you know In a way, after two big budgets under Rachel Reeves, giving them a budget, a calm budget, that is not necessarily a bad thing.

Ipsos polling out in recent days, I thought was also very interesting, Phil, because it does seem that voters, one constituent that obviously the Charter will be speaking to, they are aware of those pressures that Matt mentions, the kind of long-term pressures that are very significant for the UK in terms of the budget. They are expecting tax increases, the majority, to come in this budget, but they don't think that the majority of the pressure is going to be dealt with by the government until after the next general election. So there is maybe a disconnect actually between how voters think the government is going to behave and maybe how the government will have to act so a last thought would you feel on the trajectory you know

looking further down the road after this budget what might come next.

Well in built in that assumption that it's going to be after the next election seems to be that the public that suggests that the public actually are going to vote for a government that's going to say we need austerity and we need tax rises which i know i'm not sure they're actually thinking that that is and that is what is going to be called for to actually bring the public finances under control. Um, unless we get a growth miracle. Um, I, I think, um, as Matt was talking about with this, with the spending pressures, we've got, um, there is a risk that the bond markets don't find what Healy does in the budget is credible because there are these sort of 24 billion pounds worth of spending pressures on departments, which are not, if they're not addressed,

it kind of makes a little bit of a fiction of the, of, your ambitions. And Healy was saying to us reporters in the IMF in Bangkok, um, that he, he believes it is up to the, uh, the departments to reprioritize, to basically, you know, find the savings that are necessary. So, um, it doesn't sound like he's intending on topping up any of the departments where there have been these, this erosion of their budgets through, through faster and higher inflation. Um, uh, so yes, longer term, it, So this goes back to your first point about, you know, whether the Tories, what we're seeing is this return to the old norms of the high spending, big state Labour government potentially, or the lower spending, lower tax, but public

services being throttled. as they were to a degree under George Osborne after the financial crisis, we could be going back to that. And that would be an interesting election because there would be potentially no obvious centre ground. So you'd really have to make your decision as a voter.

Yeah, absolutely. Well, let's see what happens then on Budget Day. Meanwhile, thank you so much for being with us and explaining what is at stake here with the budget from John Healy. Phil Aldrich, our senior UK economy reporter, and Matthew Bunney, our Bloomberg Economics UK economist. Thank you so much. And we'll have special coverage of the budget live next week on Wednesday, the 28th of October. on Bloomberg Radio. I'm Caroline Hepke. You can catch us every weekday morning here for Bloomberg Daybreak. You're beginning at 6 a.m.

In London.

That's 1 a.m. on Wall Street.

Nathan.

Thanks, Caroline. And coming up on Bloomberg Daybreak weekend, we'll discuss the next monetary policy decision coming from the Bank of Japan. I'm Nathan Hager, and this is Bloomberg. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Nathan Hager in Washington. The Bank of Japan has a policy decision this coming week, and it is expected to be a hold. For a closer look, let's get to Doug Krisner, host of the Bloomberg Daybreak Asia podcast.

Thanks, Nathan. Our colleagues recently surveyed several economists on what the Bank of Japan may deliver. None expect a rate hike when the BOJ concludes its meeting on Friday. However, more than 80% do anticipate a rate hike in December. For a closer look, let's bring in Bloomberg economist Taro Kimura.

He covers the Japanese economy and the BOJ, and Taro joins us from our studios in Tokyo. Thank you for being here. Before we get into what the BOJ may confront at the meeting, can we discuss a little bit of what showed up in the last CPI print? I think we're looking at headline inflation in Japan. excluding fresh food of about 2.1% at an annual rate. And then if you kind of look at fresh food and energy taken out, we're looking at an inflation rate of some 2.4%.

So both measures are above the BOJ's 2% target. Is it tough for the BOJ right now to perhaps hold rates steady? Shouldn't they be moving to tighten?

What's happening to Japan's inflation is for sure price pressure is intensifying because of a spillover from a weak yen through the summer. It's corrected right now, but it's still in a weak territory by historical standards, as well as, of course, higher crude oil prices as a big oil importer. That's a huge price pressure. But in a bigger picture for the BOJ is they know the inflation is going to pick up because of those price pressures. But at the same time, it's in the pace of their expectation, which was laid out in their latest outlook report, which was published in July. So I think, of course, the BOJ is keen to hike rates. But at the same time, you know, if you hike in October, that's going to

be a back-to-back hike after its 25 basis point move in September meeting. And by the way, back-to-back hike, hasn't happened in the modern BOJ history, at least in the current monetary policy frameworks set up in 1998. So therefore, back-to-back hike without any very surprising development in prices probably spook all the markets, particularly when the yen carry trades are jittery and there is concerns over AI stock tradings.

So therefore, the answer for the next week is the hawkish hold, and they're going to deliver a rate hike in December, as many markets, including me, expected.

Okay, so your forecast, Haro, is for a hawkish hold. I think there is a lot of interest among market participants as to where rates will peak in this cycle. What is your sense of the destination, the so-called terminal rate? Where do you see it landing?

I see my terminal rate at 2%, and the Bloomberg Economics projection is they're going to deliver 25 basis point hike in December, March, and July. That leads to our terminal rate for 2%. And the reason for this is, of course, the 2% nominal policy rate is consistent with a 2% target with Japan's sort of a very low potential growth. So it's likely nearing Japan's expected neutral rates.

And at the same time, it's important to consider some political factors perspective in a sense that current Prime Minister Takaichi is pro-growth, and she just laid out her very ambitious fiscal plan designed to bolster Japan's long-term growth. Bloomberg Economics thinks her fiscal plan is doable, but at the same time, if the BOJ hikes aggressively beyond 2%, that will lead to market concerns that, you know, increased interest payment for the government will make some tensions about her fiscal policy. And in reality, BOJ and needs to avoid serious conflict with the government. So that's why for these neutral rate perspective as well as political perspective, I think the 2% is the terminal rate.

So when you look at the growth rate for the Japanese economy right now, what are you forecasting?

We are forecasting 0.5% for 2026 and extending it to above 1% for 2027. It sounds probably law, but by Japan's standards where... potential growth rate is estimated at 0.7 percent both by the bank of japan and the government that's not a bad deal and i think in general japan's economy is solid and resilient because of the of course the higher crude oil prices are headwind but at the same time there's a tail tailwind from ai related demand not as much as south korea and taiwan but Japan produces semiconductors and chip-making machines and items that's used for data centers. So that's going to be bolstering Japan's underlying growth. And even with the BOJ's hawkish turn and rate hikes, I think the corporate earnings are going to

remain solid and growth momentum is going to remain solid.

Taro, I'd like to bring the yen into the conversation. We remember back at the end of July when the yen was trading at around $ 1. 64 against the dollar, a very weak level. the U.S. appeared to become concerned about the possibility of an intervention that may involve the sale of U.S. Treasury, something the Trump administration did not want to see. And right after that, we saw coordinated yen buying, currency intervention, yes, between the U.S.

And Japan.

So the yen right now is stronger relative to that point in time, although if you go back to where the yen was trading against the greenback a year ago, it's a little weaker. Now, lately, the yen has benefited from some haven buying, and that's been associated with the turbulence in AI-related stocks. But I'm wondering about the dynamic of the yen going into this BOJ meeting and how it may enter into the thinking among policymakers.

Yes, that's an important question because, yes, on Thursday, Asia Trading, I was seeing yen strengthening, and that was the first time for... many periods that I see some sort of risk-off yen buying thing was happening. And I see this as a typical classic move of the unwinding of the yen carry trades. And Bloomberg Economics has analyzed that yen carry trades piled up through summer is very much associated with AI stock rallies, not just Japanese AI-related stocks, but globally.

including the U.S.

Ones.

So therefore, the jittery AI demand, probably risk-off events such as French yields or something is adding to attention, and investors who are conducting and carry trades are unwinding their trades. And it's related to the BOJ's policy because it will add caution. Of course, every central bank becomes cautious when markets are jittery, but it's deeper for the Bank of Japan because it mirrors their memory of back in 2000 when the dot-com bubble burst after the Bank of Japan's end of zero interest rate policy on that year. And many markets and many lawmakers criticized that the Bank of Japan tightening was early and too hastened. And that's adding a very strong institutional memory as a backlash of BOJ tightening.

So therefore, when markets are jittery, particularly when it's related to tech stocks, and if this price correction is continuing throughout the year, I think the BOJ may change the course for their hawkish turn that's made in September.

So before I let you go, we know, you and I both know, and we've spoken about this in the past, how embedded deflation had been in the Japanese economy for probably three decades. And I'm wondering whether the reversal that we have seen and this inflation that has been measured over the last several years has become sustainably embedded in the Japanese economy to the extent to which the BOJ can feel as though the job has been done.

I think the BOJ is thinking their job will be probably done in a very smooth manner, a soft landing, and it's a good progress. I think what we have learned in this latest BOJ tightening Japan's deflationary mindset was shook off from corporates, from households, from economists, every player in the economy. But at the same time, we also have the luxury that the market's inflation expectations are isn't easy to blow up because of the past deflationary memory.

So the BOJ is seeing mid to long-term inflation expectation has reached around 2%, and probably it's overshooting, particularly in the corporate side. But at the same time, BOJ isn't worried about it's going to easily overshoot the 2% target. So that's why the BOJ keeps a three-month pace of tightening.

And I think the two the hike towards 2%, which I think is a terminal rate for this current tightening cycle, is enough to keep the price settling around 2% target.

Taro, we'll leave it there. Thank you so very much for helping us preview the upcoming BOJ meeting. He is Bloomberg economist Taro Kimura, joining from our studios in Tokyo. We go to Singapore next, where in the last week, Barclays hosted its annual Asia Forum. Investors, together with corporate executives and Barclays leadership, examined macroeconomic trends and investment opportunities across the Asia-Pacific. And it was there we had the chance to speak with Jadeep Khanna. Jadeep is the APAC CEO at Barclays. He spoke with Bloomberg TV host Haslinda Aman.

Asia is an important part of the business for Barclays, 5% of overall revenue.

What is the strategy going forward?

How do you drive growth?

Without getting into specifics, Asia has become a lot more significant to Barclays, particularly to our investment banking business, where it's closing on well above 15% of the aggregate revenues of our investment bank. Our presence in the region is a large investment bank and a smaller but very fast-growing private bank. Asia is central to Barclays. Japan is a very important market for us. India is where we have the second largest presence of human capital for Barclays after the UK. It is strategically important. It's a growth market.

And then, of course, Singapore and Hong Kong, Hong Kong, China, where we are present. China is the second largest economy in the world. And in previous conversations also, Asalinda, I've been always extremely constructive about China. It remains a very significant opportunity. And it's a market that no global investment bank can ignore.

Jaynab, you know the Indian market really well.

How do you stop, how does India stop the outflow of international capital? There's no one prescription, Slinda. But it all boils down to doing the basics well. Continue the reform agenda. Be sensitive to the concerns of international investors, whether it is friction that emerges from things like STT or capital gains tax. make the operating environment for FDI in India easier, so a focus on ease of doing business, as the Prime Minister talks about. So it's many small things.

Doing more of them consistently will get capital to come back into India.

That was Jadip Khanna, APAC CEO at Barclays, speaking with Bloomberg TV host Haslinda Amon on the sidelines of the Barclays Asia Forum. I'm Doug Krisner. You can catch us weekdays for the Daybreak Asia podcast. It's available wherever you get your podcast. Nathan?

Thanks, Doug.

And that does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at 5 a.m. Wall Street time for the latest on markets overseas and the news you need to start your day. I'm Nathan Hager. Stay with us. Top stories and global business headlines are coming up right now.

Daybreak Weekend: US Tech, UK Budget, BOJ Decision

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