UK GDP Growth Surprises: Is the Bank of England’s Rate Cut in Jeopardy?

UK GDP Surprise Puts Bank of England Rate Cut Timeline in Question; GBP/USD Recovers Losses

By Bob Mason | Published: August 14, 2025, 06:26 GMT

The UK economic data has stirred fresh doubt in the Bank of England’s policy path. The British pound gained strength against the US dollar after stronger-than-expected June GDP numbers came out. These figures hint that the UK economy stays tougher than many believed.

Strong GDP Growth Questions BoE’s Rate Cut Plans

The Office for National Statistics shared that the UK economy grew 0.4% from May to June 2025. This rise came after May’s 0.1% drop and went beyond the forecast of 0.1%. In Q2, the economy grew 0.3% after a 0.7% rise in Q1. The annual rate sped up from 0.7% in Q1 to 1.2% in Q2, which beats the estimates of 0.1% quarterly and 1.0% yearly.

The services sector grew by 0.4%, while construction output went up by 1.2%. Overall production fell by 0.3%, but manufacturing grew 0.3%, keeping the earlier quarter’s momentum. Household spending rose 0.1% in Q2 as people bought more transport, clothing, footwear, and housing items.

These figures all point to more economic speed, pushed by services, private spending, and manufacturing.

Inflation Concerns Shroud Monetary Policy

The better-than-expected GDP data makes the BoE’s policy work more complex. The BoE did cut rates by 25 basis points to 4% earlier in August with a close vote of 5-4. But the bank now faces fresh worries over rising prices. Wages did not rise as fast, with average earnings (including bonuses) at 4.6% in June compared to 5% in May. This slower wage move might slow buying, even as price rise forecasts move up.

James Smith, Research Director at the Resolution Foundation, said, "Inflation is now expected to peak at 4.0% in September, up from a forecast of 3.7%. The inflation outlook for the bank has been adjusted higher."

The next UK Consumer Price Index report comes on August 20 and will be watched for hints on price moves. Experts expect inflation to move from 3.6% in June to 4.0% in July. If prices keep rising, the BoE might hold off on more rate cuts for now. This could push any cuts to November or December.

ING Economics still predicts a rate cut in November but warned, "If new price data surprises us or if private-sector jobs improve, our view may change."

GBP/USD Reacts to Economic Data

The market took note of the GDP numbers. Before the data came out, GBP/USD hit a low of $1.35639 but later rose to $1.35919. After the report, the pair dipped to $1.35685 and then went up to nearly $1.35858 as traders adjusted their views of the BoE rate cuts.

On August 14, GBP/USD traded 0.05% higher at about $1.35806. This shows that traders now see a lower chance of a near-term rate cut.

Outlook

The strong UK economic data marks a modest return to growth. It also makes it possible that the Bank of England might pause on further policy easing amid rising price risks. Market watchers will study the upcoming CPI figures for hints on price trends. Their findings may shape BoE decisions and guide the future of the British pound.

For more updates on world economic signs, currency moves, and expert views, visit FXEmpire’s economic calendar and market insights.

About the Author
Bob Mason brings over 28 years of experience in financial markets, covering currencies, commodities, and global equities with a focus on Europe and Asia.

This article is for informational purposes only and does not serve as financial advice. Readers should do their own research and talk to professional advisors before making any investment decisions.

Navigating Economic Turbulence: China’s Trade Truce and Stimulus Measures Amidst Deepening Challenges

China Extends Trade Truce and Launches Stimulus Efforts Amid Economic Challenges

By Bob Mason
Published August 14, 2025, 02:33 GMT

China faces growing money stress. It extends the trade break with the United States and starts new money plans to fuel local buying. New facts show Beijing may not meet its 5% growth goal for 2025. ### Trade Truce Extended

On August 11, Beijing and Washington agree to keep the trade break for 90 more days. Both sides avoid a hard trade fight that might shake world markets. Investors feel a careful hope in the market.

New Stimulus Measures to Boost Consumption

The country sees slow money movement. The Finance Ministry explains plans that focus on personal buying. The plan gives loan interest cuts on personal loans. These cuts work from September 2025 to August 2026. Borrowers may get cuts up to 3,000 yuan per lender. The goal is to spur buying in cars, elder care, education, home fixes, and electronics.

Some experts worry about the plan. David Scutt, a market analyst at Stone X and Forex.com, says, "China has talked about sparking buying for years with a plan on consumer loans. You can bring a horse to water, but it might not drink. The loan use depends on confidence."

Economic Data Reflect Growing Strains

Economic signs show a tough time. The S&P Global China General Manufacturing PMI falls from 50.4 in June to 49.5 in July. New export orders drop. Factories see higher costs for materials and lower prices for goods. Some cut jobs to keep costs low.

Retail sales grow 4.8% year-over-year in June, down from 6.4% in May. The official urban jobless rate stays at 5%. Other data from factory surveys hint at rising job loss risks as the third quarter goes on.

Lower house prices, heavy factory issues, and a slow work market keep buyer mood low. These signs show Beijing struggles to boost strong local buying despite new plans and a calm trade tie.

Youth Unemployment and Labor Market Pressures

Young job loss remains a hard risk. Even if the main urban rate stays steady, youth unemployment is high at 14.5% in June. Alicia Garcia Herrero, Chief Economist for Asia Pacific at Natixis, points out that factory workers face steep job cuts. She notes a drop in prices and wages that falls too low.

She says, "China’s factory workers hurt while exports – and even the economy – keep growing despite U.S. taxes on goods. The plan seems off if exports fall short of covering costs." She adds that some workers see fewer hours or time off without pay instead of full job loss.

Almost 30% of China’s workers are in making, building, or mining jobs. These sectors face hard times. But the service sector, which employs nearly half the workers, shows hope. The S&P Global China Services PMI moves from 50.6 in June to 52.6 in July. Service companies see more outside demand and add jobs. This part of the economy shifts toward growth led by buying.

Market Response and Outlook

Markets cheer the trade break news and Beijing’s new money plans. The CSI 300 and Shanghai Composite Index show gains in August. The Hang Seng Index, in particular, jumps more than 28% so far this year.

Now, all eyes look to the key money data coming on August 15. This data tells if Beijing’s steps can keep growth and jobs stable. If the new data shows more low numbers in job counts, store buying, and making goods, investors might lose hope and see more market swings.

Conclusion

The extended US-China trade break and new Chinese money plans bring hope. Yet, challenges remain. Rising job loss, slow local buying, and weak factory work all stand in the way of the 5% growth mark in 2025. Investors and makers of rules wait for new data to see if Beijing’s moves work and to plan the next steps in a changing set of global and home challenges.

For continuous updates on China’s trade rules and data news, follow FX Empire’s live coverage and check the money schedule.

Trump vs. Goldman: The Economic Fallout of Rising Tariff Inflation

Economists Warn of Rising Tariff-Driven Inflation as Trump Criticizes Goldman Sachs

Tariffs and inflation now drive many talks. Economists on Wall Street agree that tariffs will raise consumer prices soon. Recent consumer price data look upbeat. Tariffs, however, will push prices up. Goldman Sachs said prices affected by tariffs will increase. This view upset many, including former President Donald Trump. Many experts share this warning.

Goldman Sachs Faces Backlash Amid Broad Consensus

Goldman Sachs sparked conflict when its economists showed that tariffs will hit consumers harder in the second half of 2025. Trump shared his anger on Truth Social. He told CEO David Solomon to fire the economist behind the study or to leave the job himself.

Goldman Sachs economist David Mericle spoke on CNBC. He said, "If we fired every economist who shares this view, Wall Street would soon have many empty seats." His words keep market views close and simple.

Wall Street Economists See Inflation Creeping Upward

Many economists see a steady rise in prices. Companies use up cheaper stocks and then pass on the high cost of tariffs. Tariff rates climbed from 3% to almost 18% this year. Soon, consumers will see higher bills.

• Michael Feroli of JPMorgan Chase says tariffs may take 1% off the economy and add 1% to 1.5% to inflation.
• Brian Rose, a senior economist at UBS, sees core inflation stop falling as tariffs push store prices higher; he notes that slowing shelter costs and a consumer check might limit the jump.
• Pantheon Macroeconomics watches core inflation climb 1 percentage point, reaching 3.5% by year-end.
• PNC chief economist Gus Faucher sees core PCE inflation rising above the Fed’s target soon.

Most experts see no wild inflation. They expect a slow rise of 0.3% to 0.5% each month. This rise may place core inflation in the low- to mid-3% range.

Impact on Federal Reserve Policy and Consumer Spending

The rise in inflation will affect the Fed’s plans. With price pressures growing, many economists think:

• The Fed may wait to cut rates, starting later as the job market drops and if inflation seems brief.
• Higher prices may slow down how much people spend. This change could also slow economic growth for the rest of the year.
• JPMorgan projects that tariffs might lower GDP growth by nearly 1%, while the Blue Chip Economic Indicators report shows about 0.85% growth in the second half of 2025. —

Near-Term Concerns and Inflation Stickiness

Some risks may push inflation higher. On August 29, the tariff break for goods under $800 ends. This rule change may raise retail prices.

Other worries are that some prices move slowly. Rent, insurance, and home items change over longer periods. The Cleveland Fed measured sticky-price CPI inflation at a 3.8% yearly rise. This level is the highest since May 2024. It shows that price increases persist in some areas, even when food and energy do not change as much.

BNP Paribas notes that inflation may spread. Service prices also show upward moves. The key worry for the Fed is if high prices will stay for a long time.

Summary of Expert Views on Tariff Inflation Effects

• Tariffs may drive inflation up by 1 to 1.5% and reduce GDP by about 1%.
• Core inflation may rise slowly, reaching about 3.5% by year-end.
• The Fed may hold off on rate cuts until it sees that price rises are short-lived.
• Ending tariff breaks might push store prices higher.
• Slow shifts in some prices could lead to lasting cost increases.

Conclusion

Experts share one clear message. Tariffs seem set to push inflation higher soon. This shift will challenge both buyers and policy makers. Trump’s anger at Goldman Sachs shows the tight politics around this trend. Yet, the firm’s forecast fits many Wall Street views. In the coming months, buyers should get ready for modest price hikes, especially for items hit by tariffs. Investors and policy makers now watch as these changes shape economic growth and Fed moves.

For continual updates on inflation, tariffs, and market reactions, stay tuned to CNBC.

Goldman Sachs Defends Tariff Impact Prediction Amid Trump’s Criticism: Consumers to Feel the Pinch

Goldman Sachs Stands Firm on Forecast: Consumers to Bear Most Tariff Costs Despite President Trump’s Criticism

Goldman Sachs now backs its view. The bank expects that US buyers will cover most tariff costs. This idea comes amid sharp talk from President Trump. He questioned the bank’s study and its team of economists.

Tariff Impact on Consumers: Goldman’s Projection

In a CNBC interview on Squawk on the Street, economist David Mericle stuck to the bank’s view. He said the data shows tariffs will come hard by fall. Mericle explained that US buyers will pay about two-thirds of the extra cost.

“If the April tariffs act like the ones from February, our plan shows buyers face about two-thirds of the cost by fall,” said Mericle.

The President’s Response

On his social media site, Truth Social, President Trump spoke out on Tuesday. He told CEO David Solomon to “get a new economist” or quit. Trump called the bank’s view off track.

Still, Mericle ignored these claims. He stood by the bank’s models. A report by economist Elsie Peng, which sparked the president’s anger, noted that exporters and businesses have so far picked up most tariff costs. This balance will soon shift more to US buyers.

Economic Insights and Inflation Projections

The bank’s numbers show that tariff-driven price hikes could push the PCE price index to about 3.2% by the end of 2025. This index is the inflation tool favored by the Fed. At one time, the core PCE rate was 2.8% in June, while the Fed still aims for 2%.

Mericle added, “A US company shielded from global rivals can raise its prices and see gains.” His estimates sit well with those from other top economists.

Future Policy and Market Implications

Mericle said that even with rising prices, the president may see some relief in the form of Fed rate cuts. He described the rise as a one-time price jump. This change will not force the Fed to shift from its focus on jobs.

Recent data points—small gains in the consumer price index and a soft July nonfarm payroll report—make markets think that rate cuts may come at later Fed meetings in 2025. ### Summary of Key Points:

  • Goldman Sachs sees US buyers covering about two-thirds of tariff costs by fall 2025.
  • President Trump openly rejected Goldman’s forecast and called for a change in leadership.
  • Tariffs may lift the key Fed inflation measure to near 3.2% by year-end.
  • Even if prices grow, Goldman expects some rate cuts because of job market needs.
  • The debate shows a clear divide between economic views and political opinions.

For updates on market moves, inflation, and Fed plans, stay tuned to CNBC.

Crude Oil’s Supply Surge: A 3 Million Barrel Inventory Increase Pressures WTI Prices

Crude Inventories Rise by 3 Million Barrels; WTI Oil Prices Stay Under Pressure

August 13, 2025 – By Vladimir Zernov

The EIA report shows more oil on hand. The report tells us that stocks grew by about 3 million barrels from last week. Analysts expected a drop of 0.8 million barrels. Total stocks now sit about 6% below the five-year average. This fact tells us that supply remains tight by past measures.

Key Inventory and Production Highlights

  • Strategic Petroleum Reserve: The reserve moved from 403.0 million barrels to 403.2 million barrels. This small change fits the pattern we see in recent weeks.
  • Domestic Oil Production: U.S. output went from 13.284 million barrels per day to 13.327 million barrels per day. Analysts point out that if production crosses 13.4 million barrels per day, more growth may follow as oil prices hold.
  • Crude Oil Imports: Imports jumped by 958,000 barrels per day to about 6.9 million barrels daily. The strong rise in imports is the main cause of the overall stock gain.
  • Gasoline and Distillate Stocks: Motor gasoline stocks dropped by 0.8 million barrels, which is a bit less than the one million barrel drop some had forecast. Distillate fuel stocks went up by 0.7 million barrels.

Market Reaction and Oil Price Movement

After the report came out, WTI crude oil prices dropped. WTI now fights to stay above $62.50 per barrel. Investors feel unease with the jump in oil stocks. At the same time, Brent crude fell toward $65.50 per barrel after the report.

The report shows a strong link between more imports and slow domestic production growth. Traders keep a close watch on the supply of and demand for oil. They track seasonal fuel use and any global events.

Outlook and Economic Context

The report shows that stocks grew more than many expected. Yet, stocks still stay below normal levels. This fact tells us that market tightness has not faded. The steady rise in domestic production shows that U.S. producers adjust to current oil prices. Ongoing gains will come only if prices stay above key levels.

For more updates on energy data and oil price trends, readers can check the FXEmpire economic calendar and the commodity news sections.

About the Author:
Vladimir Zernov is an independent trader with more than 18 years in financial markets. He studies stocks, futures, forex, indices, and commodities to track both long- and short-term trends.

Disclaimer: This article is for information only and is not investment advice. Readers should do their own research and speak with a financial expert before taking any trading actions.

Fed Nominees Dispute Tariffs as Inflation Cause, Align with Trump’s Economic Strategy

Fed Board Contenders Miran and Bullard Say Trump’s Tariffs Do Not Drive Inflation

In recent talks, two top economists and leading Fed candidates, Stephen Miran and James Bullard, argued that Trump’s tariffs do not add to inflation. They link their view with Trump’s own claim that tariffs do not push prices higher. This claim has stirred debate among economists and decision makers.

Tariffs and Inflation: Diverging Perspectives

Miran, who serves on the White House Council of Economic Advisers and is picked to finish a short term as a Fed governor, told CNBC that there is “no proof that any tariff raised prices.” He noted that forecasts of harm from tariffs did not come true when the years passed.

Bullard, a former head of the St. Louis Federal Reserve and a likely candidate to take over as Fed Chair, voiced a similar idea. He said that data shows “Trump’s aggressive tariffs have not driven inflation.” Bullard explained that price jumps lately seem to be one-time changes rather than a slow and steady rise.

Fed Policy and Interest Rate Outlook

Each economist skipped a direct vote on future rate moves. Bullard hinted that the FOMC might cut rates again as soon as September 2025. He said the Fed could lower its key rate by one full point within one year. This plan would bring rates near a “neutral” level.

Bullard mentioned that the Fed stopped cutting rates because of uncertain tariff effects. Now, with half a year of new data, he sees the taxes as having small and short-term effects on price levels instead of causing a lasting rise.

Inflation Data and Market Reactions

The discussion followed a report from the Bureau of Labor Statistics. The report noted that the Consumer Price Index (CPI) increased by 2.7% for July 2025. Although this is above the Fed’s goal of 2%, it is lower than what Wall Street expected. This news has sparked new debates on the tariff’s role in price movements.

Federal Reserve Independence Amid Political Pressure

Both Miran and Bullard stressed the need for the Fed to work without outside influence. Their remarks came while tensions grew between Trump and Fed Chair Powell. Trump has often taken aim at the Fed and pressed for strong rate cuts. After the recent CPI report, Trump posted on his social media and demanded a 3 percentage point rate cut. He blamed slow policy moves for the current issues.

Bullard replied in a measured tone, noting, “He has his view. Many have their view.” His words remind us that the Fed needs to consider many points of view.

Context: Fed Leadership Changes on the Horizon

Miran is set to serve out the rest of former Governor Adriana Kugler’s term after her exit. Meanwhile, Bullard is considered among several names to fill the gap when Jerome Powell’s chairmanship ends in May 2026. —

Key Takeaways:

  • Miran and Bullard dismiss the idea that tariffs cause ongoing inflation.
  • July 2025 data shows a CPI rise of 2.7%, which cools some earlier fears.
  • Bullard sees a chance for Fed rate cuts to start by September, to ease borrowing.
  • Both stress that the Fed must work free from political pressure.
  • A shift in Fed leadership may change the future path of U.S. monetary policy.

As the Fed moves through these changes, the views of candidates like Miran and Bullard will be closely watched for clues to the future direction of U.S. money policy.

US CPI Steady Amid Falling Energy Prices: Insights on Inflation Dynamics and Market Impacts

US Consumer Price Index Holds Steady in July as Energy Prices Ease

By James Hyerczyk
Published: August 12, 2025, 12:39 GMT+00:00

The US Consumer Price Index (CPI) shows steady inflation in July. The index slows as energy prices drop. A fall in energy costs helps balance slow rises in service prices. The Bureau of Labor Statistics (BLS) releases this report. Headline inflation rises 0.2% from last month. It holds an annual pace of 2.7%, a rate just below market views.

Headline Inflation Slightly Below Forecast

In July, prices move up by 0.2%. The yearly CPI growth stays at 2.7%. This rise is close to Dow Jones estimates. The core CPI, which leaves out food and energy, climbs 0.3% over the month. Over the past year, core inflation shows a 3.1% rise. The core rate is a bit higher than the predicted 3.0%. This points to steady price pressures in key areas.

Shelter and Services Remain Main Pushers

The report flags shelter costs as a main driver of price gains. Shelter prices go up 0.2%. Both rent and owners’ rent also grow 0.3%. Medical care prices jump 0.8% as dental and hospital costs rise. Airline fares climb sharply by 4.0% after a drop in June. Prices for recreation and household items also move higher. These shifts show that the service price rise holds firm.

Energy Prices Ease Inflation Pressure

Energy prices fall by 1.1% in July. Gasoline prices drop 2.2% this month, which adds up to a 9.5% fall over the year. Natural gas prices slip by 0.9%. Electricity falls slightly by 0.1% for the month, yet sits 5.5% above last year’s price. The dip in energy costs helps offset the pressure from other areas.

Food Prices Stay Near Flat

Food prices do not change much in July. Costs for food consumed at home drop by 0.1%. Low prices for eggs (down 3.9%) and nonalcoholic drinks (down 0.5%) help balance a 1.5% rise in beef prices. Prices for food eaten away from home go up 0.3%. Full-service restaurant meals rise by 0.5%, hinting at mild price growth for dining out.

Market and Federal Reserve Issues

A softer headline CPI and lower energy prices may ease some stress on the Federal Reserve. Yet, core inflation stays above 3%, a sign that the Fed may hold a careful view. Bond traders see a calm market in US Treasury bonds as they adjust to the slower inflation pace. The US dollar is likely to remain steady. Stock prices may get small boosts, especially in consumer and transport areas that feel the drop in energy costs. Trade issues and tariff risks may still limit gains.

About the Author:
James Hyerczyk is a seasoned US-based technical analyst and educator with over 40 years of experience in market analysis and trading. He studies chart patterns and price moves. He wrote two books on technical analysis. His work spans both futures and stock markets.

For further details and daily updates, visit our Economic Calendar and stay informed on market trends that affect commodities, currencies, cryptocurrencies, and global indices.

July 2025 Inflation Report: CPI Rises 2.7% as Tariff Effects Remain Modest, Fed Rate Cuts Likely Ahead

Consumer Price Index Inflation Report for July 2025 Shows Moderate Rise Amid Tariff Concerns

Published August 12, 2025 – Updated 3 Minutes Ago

The U.S. Bureau of Labor Statistics released the July 2025 Consumer Price Index report. The report shows prices rose by 0.2% over the month on a seasonally adjusted basis and by 2.7% over the past 12 months. The report gives a lower annual figure than market predictions of a 2.8% increase. Tariff worries came up, but the numbers stayed near expectations.

Core Inflation Trends

When experts remove food and energy from the count, the core CPI rose by 0.3% in July. This increase matches predicted numbers. Year-on-year, the core index reached 3.1%. That annual rise is the highest since February 2025, and the monthly jump is the largest since January. Fed officials study the core numbers to check ongoing price pressure and future trends.

The report shows that shelter costs moved up by 0.2%. Food prices held steady. Energy prices fell by 1.1%. In transportation, the price for new vehicles did not move, while used vehicles rose by 0.5%. Prices for transportation services and medical care both grew by 0.8%.

Market Reaction and Federal Reserve Outlook

After the report came out, stock market futures climbed and Treasury yields dropped. Traders put more money on a Fed rate cut as soon as September. This shift suggests that the market views the price rise as acceptable. The CME Group’s FedWatch tool shows that the odds for a rate cut in September have grown. It has also raised the chance for another cut in October. The odds now stand at about 67%, compared to 55% the day before.

Impact of Tariffs on Inflation Data

Tariffs on many imported goods have raised concerns among economists about their impact on price stability. The report shows that tariff effects can be seen but are not very strong. For instance:
• Prices for household furnishings went up by 0.7% after a 1.0% increase in June.
• Apparel prices increased by only 0.1%.
• Core commodity prices moved up by 0.2%.
• Canned fruits and vegetables, a group sensitive to tariffs, did not show any increase.

A former White House economist, Jared Bernstein, who worked under President Joe Biden, noted in a CNBC interview that the tariff figures show in the data but do not push prices to extreme levels now.

Challenges Affecting CPI Data Reliability

The BLS now faces problems with budget cuts and fewer staff. These cuts have stopped data collection in several cities. The bureau now uses estimates for many price groups. Critics say these changes lower the trust in the CPI readings. The debate has grown after President Trump criticized the bureau and made changes to its leadership. Trump fired the last commissioner following a weak July job report and nominated E.J. Antoni, a known critic of the BLS. This move has made the discussion about the data more heated.

Broader Economic Context and Future Outlook

Ellen Zentner, Chief Economic Strategist at Morgan Stanley Wealth Management, said, "Inflation is on the rise, but it did not grow as much as some feared. In the short term, markets may welcome these data because they keep a September rate cut possible while the labor market shows weakness." She warned that price pressures from tariffs might still grow over time.

A key issue is whether tariffs cause a one-time change in price levels or start a steady rise over time. Most experts expect a one-time shift. Still, the spread of tariffs keeps concerns alive.

The Fed pays attention to the Commerce Department’s personal consumption expenditures price index, as well as the CPI and the upcoming producer price index reports, to guide policy moves.

Additional Inflation and Wage Data

In similar figures, inflation-adjusted hourly earnings grew by just 0.1% in July, which means a 1.2% gain over the year. This small wage growth might affect how much consumers spend and slow down overall growth.

Summary of Key Figures:

  • CPI Monthly Increase (July): +0.2%
  • CPI Annual Increase: +2.7% (forecast was 2.8%)
  • Core CPI Monthly Increase: +0.3%
  • Core CPI Annual Increase: +3.1%
  • Shelter Costs Monthly Increase: +0.2%
  • Energy Prices Monthly Change: -1.1%
  • Used Vehicles Monthly Increase: +0.5%
  • Average Hourly Earnings Monthly Change: +0.1%
  • Average Hourly Earnings Annual Change: +1.2%

The July CPI report comes at a key point as the Federal Reserve weighs a possible interest rate cut while inflation risks and changes in the labor market persist. Market players and policymakers will watch the next data releases to see how tariffs and other factors shape the inflation picture.

RBA Governor Bullock’s Insightful Press Conference: Interest Rate Cuts & AUD/USD Reaction Explained

RBA Governor Bullock Emphasizes Data-Dependent Policy Outlook as AUD/USD Slides

By Bob Mason | Published August 12, 2025, 06:23 GMT

The RBA cut its cash rate by 25 basis points to 3.6%. The board made this move after checking the numbers. Governor Bullock spoke after the decision. She pointed out that the data now guides each choice we make. The report uses figures on inflation and job numbers to shape each step.

Key Insights from Governor Bullock’s Press Conference

Bullock said that every board member agreed on the rate cut. There was no talk of a larger fall. She noted that the RBA sees Australia’s neutral cash rate as a number between 3.1% and 3.4%. Bullock asked us not to fix our view on that range. She made clear that we focus on current trends in prices and work, not on a fixed target.

The governor said, "We don’t have a point estimate of where we might end up. The board has to take things meeting by meeting and absorb the data."

She shared the hard choices in moving rates. She warned that if rates stay the same, inflation could drop more but jobs might be at risk. Yet the present plan, which holds room for more cuts, builds a path for inflation to come back near the 2–3% target while work stays strong.

Bullock added, "Our inflation comes down slowly to the target, and the job numbers stay strong by historical standards. That is the good news. So far, it does not show that our rates were too high."

Updated Forecasts and Policy Expectations

Staff forecasts for August show a careful yet hopeful picture. The bank expects core inflation to fall toward the target. Unemployment numbers may keep to low marks seen in the past. The fast approach for policy means that any change will come as we watch new evidence from the economy.

Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, said, "RBA forecasts see growth a bit lower than in May, with unemployment at 4.3% and inflation at target. The view is that more small cuts will bring rates to 2.9% next year. Without these cuts, inflation would drop more and jobs would suffer a rise. We see 0.25% cuts planned in November, February, and May."

Market Reaction: AUD/USD Experiences Volatility

After the RBA update and Bullock’s words, the Australian dollar moved quickly against the US dollar. At first, the AUD/USD rose to $0.65167 when hopes for more easing lifted the market. Soon after, it slipped below $0.65, as people grew wary of rate gaps that helped the US dollar.

During the press talk, the AUD/USD moved up a bit from $0.64987 to $0.65049. It then fell again to a low near $0.64937. As of trading on August 12, the AUD/USD was down about 0.19% at $0.64999. ### Looking Ahead

Bullock’s push for a data-focused plan tells us that market players have more uncertainty ahead. The meeting-by-meeting look means every new piece of economic data—from prices to job counts—will play a strong role in the future course of policy.

For those watching the AUD/USD and other Australian figures, the next months hold important changes as the market reads new signs from the RBA and the world.

About the Author:

Bob Mason brings over 28 years of work in finance. He covers currencies, raw materials, alternative investments, and global stocks with a focus on European and Asian markets. He has worked with top rating services and major banks.

For full reports on AUD/USD trends and deep trade data, visit our dedicated forex insights section.

Navigating the US-China Trade Truce: Trump’s 90-Day Extension and Its Impact on Global Markets

Trump Extends 90-Day US-China Trade Truce as Both Sides Seek Path to Deal

August 12, 2025, 02:14 GMT — US President Donald Trump extends the truce between the United States and China for 90 more days. This move holds off a 145% tariff on Chinese goods while both sides work to reach a deal. The words in each sentence connect closely, so the meaning comes through fast and clear.

Trade Truce Extension Details

On August 11, President Trump signed an order that keeps the trade ceasefire alive until November. This decision stops tariffs from rising sharply, a threat that hovered over China and US importers. China replies in kind by keeping its pause on a 24% tax on US goods, while a 10% rate stays in place.

The pause helps tech firms like Nvidia (NVDA) and Advanced Micro Devices (AMD) to ship semiconductor chips to China without facing new disruptions. These companies now pay a 15% tax on money earned from Chinese sales. The new rule may touch more firms if Chinese demand holds steady. Nvidia fell 0.35% in stock value and AMD lost 0.28% on news of the change.

China also continues to give out permits for the export of rare earth minerals. These minerals build many high-tech items and play a part in trade talks.

Broader Trade Dynamics and Market Impact

Even as Trump pushes tariffs to cut reliance on Chinese goods, new trade numbers cast doubt on the plan. China posted a $1.2 trillion trade surplus in the last year. This number has doubled in five years, even with a strong recovery in exports outside the US. China’s manufacturing surplus now sits higher than levels seen before in Germany or Japan.

Many experts note China is spreading its export routes and seeking new trade links to reduce the hit from US tariffs. Observers from the China Beige Book and other economists watch closely. Factories in Southeast Asia now face a new tax rule on goods sent there. Alicia Garcia Herrero, Natixis Asia Pacific’s chief economist, warned that companies might need to look beyond a “China+1” method. Some may try to move parts of their operations to Mexico, although using that option has limits.

Trump’s Agricultural Urgency

Before lengthening the ceasefire, President Trump urged China to buy more US soybeans. He stressed that soybeans help ease China’s local shortages and narrow the trade gap. No clear tie links this request to the truce extension yet.

Market Reaction and Outlook

Investors saw the trade pause good news. Mainland Chinese markets reacted gently: the CSI 300 grew 0.03% while the Shanghai Composite nudged up by 0.01%. Shanghai has risen 8.89% so far this year. Hong Kong’s Hang Seng Index climbed nearly 24% in 2025, outpacing US and Mainland markets like the Nasdaq Composite.

Market watchers now meet many signals. A steady move in trade talks and hints of more measures from Beijing could boost market moods in Hong Kong and Mainland China. On the other hand, renewed trade strain or a lack of news might slow risk-taking. Key data from China on August 15, such as job numbers and shopping sales, count a lot. A rise in job losses or a weak shopping report would make people worry about China’s own market strength. But a stronger job scene and better retail spending might calm these fears.

Conclusion

The US-China trade war stays unresolved, yet this 90-day pause gives both sides needed time for talks. Each side sticks to a plan that keeps trade moving while they search for a deal. The close bonds between paired words and short sentences let readers follow the news easily, making it clear how this pause may shape global trade in the coming months.