Tag Archive for: Economic News

UK Inflation Holds Steady at 3.8% in August 2025: What It Means for the Bank of England and Households Ahead

UK Inflation Steady at 3.8% in August 2025: Implications for Bank of England’s Monetary Policy

The UK keeps its annual inflation at 3.8% for August 2025. The Office for National Statistics (ONS) released the data on Wednesday. The inflation figure meets economists’ hopes. The Bank of England stays alert and watches these numbers.

Inflation Details and Core Inflation Trends

  • Overall Inflation:
    The consumer price index (CPI) holds at 3.8% from July. This number stands against a 3.8% reading the month before. The BoE sees inflation close to its expected peak near 4% in September.

  • Core Inflation:
    Core inflation leaves out energy, food, alcohol, and tobacco. In August, core prices rise by 3.6% year-on-year, down from 3.8% in July. This small drop shows a slow shift in underlying prices.

ONS Chief Economist Grant Fitzner discusses price moves:

“Airfares drove prices down this month. Prices climbed less than one year ago after a big rise in July linked to the summer holidays. At the same time, prices at the pump rose, and the cost of hotel stays fell less than last year.”

Food prices go up for the fifth month in a row. The ONS sees small rises in vegetables, cheese, and fish items. These small jumps add to the overall inflation.

Economic and Market Response

Finance Minister Rachel Reeves speaks of household challenges:

“I know many families find life tough, and the economy may seem stuck. I want to bring costs down and help those who face high bills.”

After the inflation news, the British pound falls a bit against the US dollar. It trades at about $1.3637.

Bank of England’s Position on Interest Rates

Inflation stays a weighty point in the BoE’s choices. In August, the bank cut the interest rate from 4.25% to 4%. This move shows care in easing money rules while supporting growth and investment.

The BoE plans to keep rates unchanged at its meeting on Thursday. Some experts doubt a rate cut in November. Scott Gardner, Investment Strategist at Nutmeg and part of J.P. Morgan’s digital team, notes:

“Sticky inflation stops a fourth rate cut this year. Though wage gains slow, the inflation drop must continue before policymakers feel safe to cut rates again. A fourth cut would need signs that the labour market is soft—a win that brings its own costs.”

Gardner adds that a near-term rise in inflation toward 4% may push living costs up for households. He hints that “sticky inflation is likely to stay long.”

Looking Ahead

  • The BoE holds a careful view, seeing inflation match or exceed forecasts even after rate cuts.
  • Families feel pressure from high food and fuel costs.
  • Both markets and households wait on further news and signals from the BoE in the coming months.

This unfolding story shows the tight task for UK leaders. They work to keep inflation in check while still pushing the economy forward.

This is a developing news story. Further updates will follow.

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Anticipated Trade Deal with China: Treasury Secretary Bessent’s Optimism Ahead of November Tariff Deadline

Trade Deal with China Likely Before November Reciprocal Tariff Deadline, Says Treasury Secretary Bessent

In a CNBC interview, U.S. Treasury Secretary Scott Bessent felt hope. He sees a trade deal with China on the way. He adds more talks will occur before the November deadline. The deadline triggers new reciprocal tariffs.

Anticipated Talks Ahead of November Deadline

Bessent stressed that U.S. and China talks are now productive. He said on Squawk Box, “We’ll be seeing each other again.” His words show that Chinese officials see a chance to agree. The talks follow months of tense debate and shifts in stance. They began on April 2 when former President Trump announced "liberation day" tariffs on many global partners, including China.

At first, the plan was to impose tariffs as high as 145% on Chinese goods. The measures were put on hold to keep talks open. This pause would have ended on August 12 but was stretched to November 10 by the Trump team, giving both sides more time to discuss.

Impact on Global Markets and Trade Deficit

Bessent said that U.S. trading partners worry because Chinese goods flood their markets. One partner remarked, “They don’t know what to do about it.” He described markets that are upset with the quick flow of imports.

Bessent noted that in 2024, the U.S.-China trade gap reached almost $300 billion. By July 2025, the gap dropped to $128 billion. U.S. Trade Representative Jamieson Greer projects a gap reduction of at least 30% this year. He expects the trade gap to shrink further in 2026. ### Aiming for Fair and Balanced Trade

Bessent said, “Our goal is to come into balance, to have fair trade.” The deal is meant to fix trade gaps. It also sets fair rules for commerce between the two large nations.

Tensions and talks go on. Global markets watch each move. The tariff pause shows that both sides want a solution. This change may start a new era in U.S.-China trade relations.

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High Stakes: U.S.-China Trade Talks Intensify Amid Nvidia Probe and TikTok Deadline

Nvidia Probe and TikTok Deadline Loom Over U.S.-China Trade Talks

Madrid, September 15, 2025 — Trade talks between the United States and China stretch into a second day in Madrid. The discussions focus on TikTok’s role, tariff levels, and export controls. Tensions rise as new probes and tight deadlines add weight to decisions. Each word links closely to the next, making every connection count in this debate.

Progress and Challenges in Ongoing Negotiations

In the fourth round of talks over the past four months, the U.S. team sends Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer. China stands with Vice Premier He Lifeng and lead trade negotiator Li Chenggang. In May, both sides agreed to pause harsh tariffs and lift some limits. Today, they build on that step to ease trade strain.

Bessent said both sides made good headway on small details. They near an agreement on TikTok’s status in the United States. He stressed, “Our Chinese counterparts asked hard things. We will see if we can meet that. We are not ready to risk national safety for a social media app.”

TikTok Deadline and Its Significance

TikTok, owned by Beijing’s ByteDance, faces a hard deadline on Wednesday. The company must close a deal to keep operating in the U.S. Its recommendation code sits at the center of these talks. Washington wants more limits on how it runs, while Beijing has put this tech under export rules.

The app holds a key spot in politics and culture, especially for young American voters. Neo Wang, a lead China strategist at Evercore ISI, said Beijing might agree to Trump’s needs on TikTok if that cuts U.S. tariffs by 10% or more.

Rising Tensions: Investigations and Regulatory Actions

Troubles mount on both sides. Over the weekend, China began two probes of the U.S. semiconductor industry:

• An anti-dumping probe on some U.S.-made analog IC chips.
• An anti-discrimination inquiry into U.S. measures that target China’s chip work.

These probes came after the U.S. added 23 China-based firms to its watch list last Friday.

On Monday, China’s market regulator said an early review found Nvidia violated the country’s law on unfair competition. More checks on the U.S. chip maker are planned. George Chen, partner at The Asia Group, said Nvidia now plays a role in moves by both sides. He sees the long probe as a tactic from China.

Diplomatic Maneuvers and Future Engagements

Officials also plan to talk about a possible meeting between U.S. President Donald Trump and Chinese President Xi Jinping later this year. Reports state that Beijing wants Trump to visit China for the first state trip since 2017. Success in that meeting may depend on today’s decisions and on solving the TikTok issue.

Broader Implications and Reactions

Wendy Cutler, former U.S. trade representative and head of the Asia Society Policy Institute, called the talk style before the Madrid rounds “not encouraging.” She warned that China will likely ask for a rollback of new limits during Trump’s second term.

She added that the economic ties between the nations seem stuck. Both sides trade with limits on exports and tech.

Meanwhile, China’s Ministry of Commerce criticized Trump’s call for the European Union to impose up to 100% extra tariffs on China for its purchases of Russian oil. The ministry called the move a clear case of one-sided economic bullying and said it would act to guard its interests.

Outlook

As the U.S. and China work through trade disputes—amid tariff fights, technology rules, and social media debates—observers watch with care. The coming days in Madrid will shape the path of one of the world’s most important trade links.

For continuous updates on U.S.-China trade talks and related developments, stay tuned to CNBC.

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Empowering Housing: CMHC’s Vision for Increased Bank Risk-Taking in Construction Financing

CMHC Head Emphasizes Continued Importance of Crown Corporation in Canadian Housing Sector

By Garry Marr | Published September 12, 2025

At a recent industry conference in Toronto, Coleen Volk, president and CEO of Canada Mortgage and Housing Corporation (CMHC), made a clear point. She stressed that the Crown corporation plays a key role in Canada’s housing challenges. Volk spoke at the Canadian Apartment Investment Conference. She linked private banks with new funds for residential building. At the same time, she reassured us that CMHC stands by the housing market by taking smart risks.

Welcoming More Risk from Banks in Housing Finance

Volk wants banks to take more risks when they finance housing projects. She said, “We would love to see the banks taking more risks,” during a one-on-one Q&A with Ana Bailão, an affordable housing advocate and former Toronto mayoral candidate.
Today, about 88 percent of housing projects rely on CMHC mortgage insurance. This data shows that banks are careful. Volk’s words show that CMHC hopes to share risk more evenly with private lenders. This change may bring new money to build homes.

Regulatory Environment and Risk Considerations

Volk explained that OSFI, the Office of the Superintendent of Financial Institutions, watches over CMHC. Recently, OSFI raised the capital rules for the corporation. Volk said, “We don’t want that to limit our ability to do good things in the marketplace.” Her words tied the need for balance between safe risk-taking and meeting housing needs.
CMHC sees that the nation does not build enough homes. Its chief economist linked this problem to only half the needed annual housing starts. New data showed that in the first half of 2025, housing starts across the country fell compared to 2024. Toronto, in particular, sees its housing starts drop to a three-decade low.

CMHC’s Role Amidst New Government Housing Initiatives

Volk spoke about Ottawa’s Build Canada Homes program. This new plan will boost federal activity in building affordable, or “deeply affordable,” homes. Volk compared it to the Canada Infrastructure Bank. She noted that Build Canada Homes will work mostly outside CMHC’s usual area.
She made clear that CMHC will keep its own affordable housing programs, some of which are 30 years old. Build Canada Homes will focus on larger affordable housing projects. Volk said, “If they are taking over things that we did, it would be from that end of the spectrum, the more affordable end.” Meanwhile, CMHC will handle market housing.

Continuing Support for Rental Apartment Construction

CMHC also backs its Apartment Construction Loan Program. This program gives developers low-cost funds to build rental apartments across Canada. Volk said, “We are really firing on all cylinders there.” She linked her optimism to a plan to double the funds for this initiative.
She challenged the notion of two separate markets for affordable and market housing. Her words tied the two segments together. Volk stressed that both CMHC and Build Canada Homes will serve similar clients in a mixed housing market.

Conclusion

Coleen Volk’s remarks at the conference tied CMHC’s role firmly to Canada’s housing market. Her words link private banks with new funding, while CMHC’s leadership keeps pushing for more housing supply. The message is clear. Despite tighter rules and a national housing shortage, CMHC will keep supporting both rental and affordable housing projects.

For further details, reach out to Garry Marr at gmarr@postmedia.com.

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UK Economy Stalls: Implications of July’s Stagnation Ahead of Upcoming Autumn Budget

UK Economy Stalls in July as Signs of Slowdown Emerge

In July the United Kingdom’s economy did not grow. The numbers now point to a slowdown that puts more strain on Chancellor Rachel Reeves. She prepares for the Autumn Budget on November 26, 2025. The Office for National Statistics shared the data on Friday. The report shows no growth in July. It matches economists’ checks and slows down from the 0.4% rise in June.

Key Highlights from the Economic Data

  • Stagnation in July: The economy stayed the same in July. There was no drop; there was no rise.
  • Sector Performance:
    • Production output fell by 0.9%
    • Services and construction moved up by small steps.
  • Quarterly Growth Trends:
    • Growth in the second quarter of 2025 came in at 0.3%
    • This is lower than the 0.7% seen in the first quarter
  • Economic Outlook: Economists now see a slower pace for the UK later in 2025. ### Expert Perspectives

Sanjay Raja from Deutsche Bank, who acts as the lead UK economist, said:
"After a strong second quarter that showed the fastest growth among the G7, all ties now suggest a slowdown in the second half of the year." He connects this with shifts in trade, stockpiling behavior, changes in net purchases of precious metals, and cuts in public sector spending.

Paul Dales from Capital Economics, the chief UK economist, added:
"The flat real GDP in July shows that the economy is finding it hard to get back on track after past tax rises and hints of more in the Autumn Budget." He thinks any later tax rises will face close watch for their effect on growth.

Fiscal and Monetary Challenges Ahead

For Chancellor Rachel Reeves, who keeps the economy’s revival and spending control in view, the flat growth comes at a sensitive time. Reeves vows that spending will use tax money and not more debt. She wants to cut the UK’s debt in the coming years. Slower growth now makes these aims tougher to reach.

At the same moment, the Bank of England works between higher inflation and softer growth. Inflation hit 3.8% in July. The rise broke past forecasts and makes some worry that cuts to interest rates may pause.

Fabio Balboni from HSBC, a senior European economist, shared last week:
"Inflation staying high makes it tough for the bank to cut rates further. At the same time, fiscal issues grow as big deficits and stiff choices build up for the Autumn Budget."

Bank of England Interest Rate Outlook

The Monetary Policy Committee at the Bank of England will meet on September 18. In August, they lowered rates by 25 basis points to 4%. The split vote of 5–4 means that the bank is most likely to keep rates as they are now. Many now peer to the meeting on November 6. It comes just before the Autumn Budget and may mark a new step for money policy.

Carsten Brzeski, ING’s global head of macro, said:
"We still see a rate cut in November, though the firm tone seen in August makes us less sure of that idea."

Looking Ahead

Economic growth has slowed and inflation stays high. At the same time, uncertainty about government spending grows. The UK now faces many hurdles as it moves toward the end of 2025. Chancellor Reeves’ Autumn Budget stands as a key moment while the government seeks to balance growth with a strict fiscal plan. All this happens as global conditions stay cautious.

For ongoing updates and expert analysis on the UK economy and financial markets, stay tuned to CNBC and other leading financial news providers.

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Treasury Secretary Bessent Takes Charge in Search for New Fed Chair Amid Reform Agenda

Treasury Secretary Scott Bessent Meets Fed Officials as Fed Chair Search Heats Up

Washington, D.C., September 11, 2025 – The Fed prepares for a change in leadership next year. Treasury Secretary Scott Bessent takes a central role in the hunt for Fed Chair Jerome Powell’s successor. This week, Bessent met with former Fed officials. He met Lawrence Lindsey, Kevin Warsh, and James Bullard. Sources close to the matter told CNBC they had seen this process move forward.

High-Profile Candidate Discussions

The meetings start a key phase in President Donald Trump’s search for a new head of the central bank. Lindsey and Warsh once served as Fed governors. Bullard led the St. Louis Fed. Each brings a long resume in money policy. A Treasury insider said Bessent will wait until the current blackout period ends. This pause comes before he talks with Fed officials who now work at the central bank. The waiting helps him follow the rules inside the Fed.

Bessent’s candidate check fits into a wider review at the Treasury. The list from President Trump has names like Warsh, Kevin Hassett from the National Economic Council, and current Fed Governor Christopher Waller. His team now studies about 11 economists. The list covers both past and present bankers and market experts. This search covers faces known to many and new planners as well.

Pushing for Federal Reserve Reform

Bessent also pushes for changes at the Fed. One step in his plan asks the Fed to cut its large bond holding. The portfolio now holds nearly $6 trillion in U.S. Treasurys and mortgage-backed securities. The goal is to shrink this balance slowly. The change must happen so the markets stay calm, and the wider economy stays steady.

Bessent wants the Fed to step back from a wider role in the economy. A source near Treasury said he asks the bank to stick to its core jobs. These jobs are keeping prices steady and making sure people can work. He warns against activities that stray from these goals. In a Wall Street Journal article last week, Bessent wrote that the Fed’s tools have grown “too complex to handle.” He noted the bank often acts outside of the narrow limits set by law. His words point to a clear need for change in how the Fed works.

Fed Under White House Scrutiny

The White House keeps a close watch on the Fed. President Trump and others have asked the Fed to cut interest rates. The Fed has not lowered rates since December 2024, even though many expect a 25-point basis drop at next week’s meeting.

The change in leadership comes soon. Jerome Powell’s term as chair ends in May 2026. Powell may keep his role as governor for up to two more years. A new chair is almost a sure bet. At the same time, the Senate votes on Stephen Miran for a spot on the Board of Governors. Other moves continue at the Fed. Trump has tried to remove Governor Lisa Cook amid claims of mortgage fraud, but courts have so far blocked the move.

Looking Ahead

Secretary Bessent now leads the check of candidates and calls for reform. In the next few months, the Fed may see big changes in who leads and how it works. The search for the Fed Chair brings together known names and fresh views. This change happens amid many shifts in both politics and finance.

For more updates on the Federal Reserve’s leadership and economic policy, stay tuned to CNBC.

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Inflation Surges to 2.9% in August Amid Rising Jobless Claims: What It Means for the Fed’s Rate Decisions

Consumer Prices Rise at Annual Rate of 2.9% in August Amid Surge in Weekly Jobless Claims

Published: September 11, 2025 | Updated: 11 minutes ago
By Jeff Cox | @JeffCoxCNBCcom

A strong rise in prices shapes the current economy. The Consumer Price Index (CPI) climbed by 0.4% in August. This jump is the highest since January 2025. The annual rate now sits at 2.9%, a rise of 0.2 points since July. This value is the highest recorded since January this year.

Inflation Details: Core CPI and Key Contributors

Experts expected the monthly rise to near 0.3%. They guessed the yearly rate would stay at 2.9%. The core CPI, which drops food and energy costs, went up by 0.3% in August. This number lifts the 12-month rate to 3.1%. Fed officials see core numbers as a better sign of long-term trends.

The CPI rise came from several sources:
• Shelter costs grew by 0.4%. Shelter makes up about one-third of the CPI weight.
• Food prices moved up by 0.5%.
• Energy costs climbed by 0.7%. Gasoline prices jumped by 1.9%, which may be linked to recent tariff changes.

Employment Data Signals Rising Uncertainty

The Labor Department showed that weekly jobless claims grew to 263,000 for the week ending September 6. This seasonally adjusted number is above the expected 235,000. It is the highest level since October 2021. The steady figure of 1.94 million for continuing claims has not been seen since late 2021. Small layoffs marked the early part of the year, but the new claims show that some employers cut back on workers.

Market Reaction and Fed Outlook

Reports of higher-than-expected inflation pushed stocks up as traders adjusted their bets on Fed moves. Market talk now shows a 100% chance of a rate cut at the Fed’s meeting ending on September 17. Many now believe the cut will be by a half-point instead of the usual quarter-point, partly because labor data showed softness.

Seema Shah, Chief Global Strategist at Principal Asset Management, said:
"While the CPI report shows higher numbers than some thought, it will not slow the Fed as they plan a rate cut next week. The rise in jobless claims may push the Fed to act faster. Chair Powell could hint that we will see a series of rate cuts soon."

After the expected drop in September, many now see more cuts coming in October and December. This view comes from a growing belief that monetary policy will ease soon.

Tariffs and Inflation: A Look at the Impact

Fed officials have watched the numbers to see if tariffs affect prices. Some effects are visible in consumer prices, yet overall inflation stays low. In August, producer prices fell by 0.1% from the previous month. Prices for new vehicles, which feel tariff pressure, went up by 0.3%. In contrast, used cars and trucks, usually not hit by tariffs, increased by 1%. The Fed focuses more on service costs. Service prices, without energy, grew by 0.3% in August. Over the past year, service costs have jumped by 3.6%. Meanwhile, shelter cost growth eased from more than 8% in early 2023 to 3.6% now.

Conclusion

The new inflation and jobless claims data form a mixed picture for the economy. The rise in consumer prices, along with more jobless claims, makes the Fed work hard to balance measures. As the Fed meets later this month, these mixed signals will help set U.S. interest rates for the rest of 2025. —

For ongoing updates and expert analysis on the economy and market impacts, stay tuned to CNBC.

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Trump’s Bold Demand for Tariffs on India and China: A Controversial Move that Strains US-EU Relations

Trump’s Push for 100% EU Tariffs on India and China Sparks Controversy

September 11, 2025 — Former U.S. President Donald Trump pressed for the EU to set a 100% tariff on goods from India and China. He made his case to hit them for buying oil from Russia. His idea aims to punish these nations for aiding Russia’s energy plans. The plan divides opinion in Europe and beyond.

The Proposal and Its Context

Trump presented his plan during a meeting in Washington. Senior U.S. and EU officials talked face-to-face. Reporters from the Financial Times first noted the meeting, and CNBC later confirmed it through reliable sources. In his speech, Trump said the U.S. would copy any tariff the EU sets. The White House has not yet commented on the idea.

A European Commission spokesperson did not share details of the meeting. She explained that talks with global partners, including India and China, continue as they work on limits for Moscow. She mentioned the EU’s 19th sanction round against Russia. This round uses new methods to stop nations from dodging the rules. She said the U.S. remains a very important friend in stopping funds for Russia’s war.

European Caution and Trade Complications

European officials now watch Trump’s call with care. They worry because:

  • The EU keeps its trade and political bonds with India and China close.
  • Trade with Russia stays sensitive.
  • The U.S. is finalizing a deal with New Delhi, making timing a sharp issue.

At the moment, the U.S. puts a 50% tariff on Indian goods. It also adds a 25% fee when India buys oil from Russia. Indian leaders call these charges "wrong, unfair, and heavy." They complain about mixed signals in U.S. and EU deals with Russia.

Ian Bremmer from Eurasia Group questions Trump’s plan. He sees a problem since the U.S. also wants better trade ties with India and China. He thinks the tariff push might pass the burden on to Europe while avoiding harm to U.S. ties with China. Bremmer warns that such a move could hurt unity across the Atlantic.

Why Europe Is Likely to Reject the Proposal

Most experts believe the EU will say “no” to Trump’s plan because:

  • Europe sees tariffs as blunt tools that can hurt more than help.
  • The EU still depends on many key imports from Russia, especially energy.
  • EU trade with Russia remains high. Data shows €67.5 billion ($78.1 billion) in trade in 2024, with energy imports making up most of this.

Bill Blain, a market analyst at Wind Shift Capital, advises Europe to decline the plan. In his newsletter Morning Porridge, he warns that Europe should opt for discussions instead of entering a trade fight.

The Russia-Energy Connection

Europe buys much of its energy from Russia. This fact makes it hard to target nations like India and China. Russian pipeline gas once made up over 40% of EU imports in 2021 but dropped to about 11.6% in 2024. Still, Russia provides roughly 19% of the EU’s gas and LNG.

The U.S. now pushes Europe to buy more LNG from America. Trump pointed to a deal where the EU promised to buy LNG, oil, and nuclear energy worth $750 billion over three years. U.S. official Doug Burgum recently said that exporting LNG to Europe can cut Russian gas use and reduce money for its war.

Conclusion

Trump’s push for a 100% tariff on India and China may pull the world into a heavy trade dispute. His idea seeks to punish nations that help Russia but risks hurting important trade ties. Leaders in Europe and around the world see the plan as too risky. They choose talks over strong trade actions.

The events show the hard choices in global trade as leaders deal with sanctions, trade rules, and new world ties during the Ukraine conflict.

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France’s Economic Stability at Stake: Navigating Political Upheaval and Credit Rating Risks

France’s Economy Faces Key Risk Amid Political Turbulence and Credit Rating Uncertainty

September 11, 2025 — France’s economy goes through a tough period. Political change and credit rating risks make this time hard. The prime minister was recently removed, and protests spread across the nation. Economists and investors now worry about credit rating updates that could push up borrowing costs.

Political Instability and Economic Pressures

Last summer, parliamentary elections did not produce a clear winner. No party or alliance gained a majority, and two governments fell amid disputes about the national budget. This chaos raises fears for France’s budget strength. In 2024, public debt reached 5.8% of its gross domestic product (GDP)—the highest level in the eurozone.

New Prime Minister Sébastien Lecornu must now decide his next steps. He may follow the plan made by his predecessor François Bayrou to cut spending by €44 billion (about $51.5 billion) and raise taxes. The plan calls for removing two public holidays, freezing pensions and welfare benefits, and cutting funds to local governments. These moves have already led to large protests.

Upcoming Credit Rating Reviews: A Key Indicator

Credit rating agencies now check the risk of investing in a nation’s debt. Their reports affect borrowing costs. In the next few months, three agencies will share their assessments:

  • Fitch: Scheduled for September 12, 2025
  • Moody’s: October 24, 2025
  • Standard & Poor’s (S&P): November 28, 2025

These reviews will decide if France keeps its “double A” credit rating. This rating marks low risk and makes French government bonds popular with many investors, especially in Asia.

Potential Impact on Bond Markets and the Economy

Mohit Kumar, Chief Financial Economist for Europe at Jefferies, says a lower rating could hurt bond holders. He adds that losing the double A rating might force investors to sell bonds, which will raise yields—the price France pays to borrow money.

Higher yields lead to more expensive debt payments. This may force the government to tighten the budget even more, which many fear could slow the economy further.

Even with all this talk, bond yields on 2-year, 10-year, and 30-year government bonds have stayed steady for now. This steadiness shows some trust among investors or that they have already priced in these risks.

Deutsche Bank economists describe the upcoming rating changes as a “close call.” They note that a downgrade by one agency is unlikely to cause a sudden rush to sell bonds. Still, all signs point to a weak outlook because of ongoing fiscal and political challenges.

Economists’ Perspectives on Downgrade Risks and Market Stability

  • Berenberg Bank’s Chief Economist, Holger Schmieding, sees a downgrade as a possibility but not a surprise. He points out that a negative cycle—where rising yields push the deficit even higher—is unlikely because France’s current account is stable.

  • He warns that if snap parliamentary elections give power to groups like the far-right National Rally or the French Socialists, the new policies might hurt the economy. In that case, bond buyers could demand more risk or drop out completely.

  • George Lagarias, Chief Economist at Forvis Mazars, trusts the European Central Bank to act as a stabilizing force. Since the ECB is led by a former French finance minister, it can step in to support demand and lower borrowing costs if the market falls under stress. Still, he notes that the bank’s help cannot fix France’s deep fiscal issues. The government will face hard choices when it comes to budget cuts and pension reform.

Looking Ahead: Balancing Stability and Fiscal Responsibility

France’s future depends on managing political change while keeping strict control over its budget. The nation’s ability to maintain its high credit rating will shape its borrowing costs and guide its growth path.

As the credit rating reviews move forward, investors, policymakers, and citizens will watch closely, seeking a steady balance between a stable economy and needed budget changes in an unpredictable political climate.

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Brookfield’s Bruce Flatt Sees Bright Future for New York Real Estate Amid Expert Insights on Market Recovery and Rate Cuts

Brookfield CEO Bruce Flatt Bullish on Real Estate Rebound Amid Lower US Interest Rates

Brookfield Asset Management CEO Bruce Flatt shows clear confidence in a real estate rebound. He points to strong market changes and lower U.S. interest rates. Flatt signals that now is a good time to invest, especially in New York City. He explains his view at Brookfield’s annual investor meeting in New York.

Scarcity of New Construction Spurs Rent Growth

Flatt notes that few large office buildings are built in New York City. London sees the same trend. Less new construction and higher demand mean rents will rise. “In the next five years, rents are going through the roof,” Flatt said. He adds that limited supply, strong demand, changing rates, and easier financing come together to lift the market.

Anticipated US Interest Rate Cuts to Fuel Market Recovery

Flatt expects U.S. interest rates to drop by about 100 basis points in the next 12 to 18 months. This drop will ease financing challenges. “Transaction activity has come back,” Flatt noted. “Now you can finance nearly everything in real estate worldwide. Real estate depends on financing.” Even if office and retail segments face challenges, strong fundamentals keep the market steady.

US Market Poised to Catch Up to Other Regions

The recovery in Canada is ahead because of faster rate cuts. The U.S. market lags a bit. Flatt points out that when U.S. rates fall, the market will speed up. “Other markets have already turned, but in the U.S. we are waiting for lower rates. That change will drive recovery further,” he explained.

Brookfield’s Strategic Positioning in Real Estate and AI

Brookfield has stayed active in real estate while others let go. This steady approach gives the firm an edge when the market bounces back. Flatt also stresses a big move into artificial intelligence (AI). He calls AI a $7-trillion opportunity. If Brookfield follows through, AI-related businesses may become the firm’s largest segment in ten years. The firm is investing in AI infrastructure with plans worth around $200 billion, many with real estate links.

“We’re building core AI to drive productivity in businesses,” Flatt remarked. He explains that AI will change every business. Staying ahead in this tech race is key to remaining competitive.

Expanding Access to Alternative Investments

Brookfield is also opening doors for U.S. retail investors. It offers ways to invest in alternatives like private equity and real estate. This move follows U.S. government steps that let more people invest in alternative assets through employer plans.

Bruce Flatt’s confident outlook shows that key real estate markets are set to grow as financing improves. With bold investments in AI and smart real estate play, Brookfield aims to lead global investment trends in a changing market.

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