Tag Archive for: Fed

Navigating Euro Area Inflation: Insights on Monetary Policy and Long-term Yield Trends

Euro Area Inflation Pressures Balanced; Rising Long-term Yields Pose Concern

By Dennis Shen, CFA | Published: September 18, 2025, 17:21 GMT

The ECB stayed with the same interest rate. This move shows that the bank watches the economy closely. Inflation stays near 2%, and decision makers see little need for rate cuts now as the economy shows strength amid risks.

Balanced Inflation Environment Amid Economic Resilience

Between June 2024 and June 2025, the ECB cut rates a few times. These cuts still work in the euro area. A new trade agreement between the US and the EU helped ease price pressure. The shift of low-cost goods from China and other regions, caused by higher US tariffs, plays its part too. The euro now grows against the US dollar and other currencies, which adds to lower price trends.

Core inflation, service prices, and wage gains, though lower than before, stay above the bank target. Labor markets stay tight and push prices up. More government spending in Europe—especially in Germany for defense and infrastructure—adds to price pressure. The upcoming EU energy trading regime in 2027 may push prices higher.

Scope Ratings sees inflation near 2.1% for 2025 and 1.9% for 2026. These numbers fall from last year’s 2.4% and from 2023’s high at 5.4%.

Future Monetary Policy: Dependent on Inflation, Growth, and Exchange Rates

Scope Ratings does not see more ECB rate cuts for the rest of 2025. The bank stays ready to change policy if the facts shift. The bias later this year and into 2026 goes to easing rather than raising rates. Any change to the deposit rate, now at 2%, depends on inflation trends, US–EU trade, economic growth, and how currencies move.

The euro is about 13% stronger against the US dollar this year. If it stays past the 1.20 level against the dollar, worries about deflation and less market strength may grow. As a strong reserve currency next to the dollar, the euro rises because the US trade and fiscal plans stay uncertain and US steps try to move the dollar.

US Monetary Policy and Euro Appreciation: Potential Pressure Points

US policy now has more weight. If the US central bank cuts rates along with market pressure, the ECB faces extra work if US and euro area rates move apart. A strong euro may push prices down and force the bank to act.

[Figure 1: Official interest rates (%) with Scope Ratings projections for 2025-2026 show expected US cuts alongside the ECB’s slow hold.]

Rise in Long-term Yields: An Emerging Concern

This year shows a steady climb in long-term euro area bond yields. The baseline view had long rates high for some time. Still, the recent rise shows a new worry for managers. If US rate cuts loosen long-run inflation expectations, euro area long-term yields can climb more and the yield curve may steepen.

The bank will not use major moves in reaction for now. The increase in yields shows market concerns over price trends. These concerns come from rising government spending, more debt, and political strain in countries like France.

The bank’s Transmission Protection Instrument, meant to stop policy gaps, seems unlikely to activate unless deep political trouble in France causes sharp falls in French bonds. Still, if yields jump widely across eurozone countries, the bank might pause its schedule to reduce assets.

[Figure 2: The upward path of 30-year euro area bond yields in 2025 shows a small recent fall.]

Implications for Borrowers and Credit Markets

Rising rates put pressure on global credit. Higher rates make debt harder to pay and limit access for borrowers who need it most. A steeper yield curve makes public and private borrowers try for short-term credit. This choice brings extra rollover and interest risks and may make financial settings even tighter, which can slow economic progress.

For a full summary of economic moves, readers can check the daily economic calendar.

Dennis Shen, CFA, leads the Macro Economic Council and serves as Lead Global Economist at Scope Ratings. Based in Berlin, he brings deep study of sovereign and public sectors, financial institutions, and corporate credit.

Related Articles:

  • Federal Reserve Runs Risk of Loosening Before Inflation Is Contained
  • UK Services Inflation Softens, Raising Odds of BoE Rate Cut in Q4
  • US Dollar Gains Ground as Initial Jobless Claims Drop to 231,000

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This article gives an analysis based on current economic facts and forecasts as of September 2025. It does not serve as financial advice or recommendations.

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China’s Chip War Heats Up: Alibaba and Huawei Seize the Opportunity Amid Economic Struggles

China Escalates Chip War Amid Trade Tensions: Alibaba and Huawei Set to Dominate Domestic AI Chip Market

September 18, 2025 — China pushes its chip battle against the United States as trade talks stall. Beijing cuts ties with US tech by stopping Nvidia AI chip sales. It backs home-grown makers like Alibaba and Huawei to build a local chip system.

US-China Trade Talks Hit Roadblock in Madrid

US Treasury head Scott Bessent met China’s lead negotiator Li Chenggang in Madrid. They sat together and talked. No major deal came out of their meeting on September 16. The two sides did arrange for TikTok to shift to American control. Trade talks, however, remain stuck. US tariffs on Chinese goods continue through at least the end of 2025. Beijing sees strain on its economy as a result.

Worsening Economic Indicators Signal Headwinds

Exports in China slow sharply. Growth drops from 7.2% in July to 4.4% in August. External demand falls. Private company indexes also show strain. Firms face rising costs and must cut selling prices. Lower margins force many firms to cut jobs for the fifth month in a row. Overall unemployment ticks up from 5.2% in July to 5.3% in August. Youth unemployment for ages 16-24 reaches 18.9%, a high since December 2023. Retail sales slow too. In August, sales rose just 3.4% compared to 6.4% earlier in the year.

Beijing’s Strategic Escalation in the Chip Sector

China’s tech authority orders its biggest firms to stop buying Nvidia chips. The ban halts new orders and cancels existing ones. This step extends earlier restrictions on select Nvidia items. It shows China’s intent to build its own chip supply line for AI use. The market feels this move. Nvidia shares drop 2.62% on September 17 against the Nasdaq Composite’s slight 0.33% fall. Analysts note that this choice may take away $100 billion from Nvidia’s market value.

Alibaba and Huawei Poised to Capitalize

The chip ban turns the spotlight on local companies. Alibaba wins a key deal with China Unicom, the country’s second-biggest wireless provider, to use its own T-Head AI chips. The firm invests about 380 billion yuan ($53.5 billion) over three years to build its AI and chip system. Its stock rises over 5% on September 17 and climbs to a 98% increase for the year, far outpacing Nvidia’s 26.8% gain in the same period.

Huawei also steps up. It plans to launch the Ascend 950PR chip in the fourth quarter of 2026, with more chips to come until 2028. The company builds its reputation in home-grown AI hardware.

Market Reactions and Broader Implications

Mainland Chinese stocks gain strength in 2025. The CSI 300 and Shanghai Composite go up by 15.8% and 16.1%, just ahead of the Nasdaq Composite’s 15.3% rise. Hong Kong’s Hang Seng leads with a 34% jump for the year. Market risks still remain. Trade tensions continue, housing shows signs of weakness, and pressure on profit margins and job reductions add to worries. These factors may slow down household spending and growth further.

Outlook and Strategic Considerations

Some experts keep a hopeful view. Goldman Sachs has raised its China 2025 GDP forecast from 4.6% to 4.8%. This hope rests on a push for more fiscal support in job and housing areas. China’s growing role in AI investment and chip building now sets its path toward tech independence amid ongoing US-China rivalry. Local companies like Alibaba and Huawei now lead China’s chip scene. Their move may shift the global balance in semiconductor production.

This report will be updated as developments in US-China ties and China’s semiconductor scene continue to change.

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Will the Fed Cut Rates Too Soon? An In-Depth Look at Inflation Risks and Market Pressures

Federal Reserve Runs Risk of Loosening Before Inflation Is Contained

By Dennis Shen, Updated September 17, 2025, 16:43 GMT+00:00

The Federal Reserve gets set to announce new interest rates. Many experts fear the bank may ease rules too soon while inflation still runs high.

Current Economic Context

Headline inflation in the United States stands at 2.9%. The economy grows at about 2%. Some signs show a small dip in the labor market, yet the overall scene stays strong. Uncertainties from higher tariffs make the outlook less clear. Most expect the Fed to cut rates by 25 basis points in its next meeting.

Market Expectations and Political Pressures

Financial markets mostly assume a rate cut is on the way. Some investors even guess a 50bps cut will come. This view comes from market mood and political push. The U.S. administration asks the Fed to ease fast to boost growth. Cutting rules too early might let inflation come back strong.

Risks of Premature Easing

Cutting rates before inflation is well checked brings back memories of last September. Then, a 50bps cut was made under market and political weight after short-lived labor worries. Today, lower immigration means the job market may need fewer workers to stay balanced. This factor could lower the need for large cuts.

Chairman Powell might point to signs of stress in the job market. Weak payroll numbers in August, small rises in the unemployment rate, and more claims for jobless benefits add to this view. A drop in producer prices and a slow rise in core price levels may further back the case for a cut.

Gauging the Magnitude of Rate Cuts

Some discuss a 50bps cut, but even many FOMC members are not set on a 25bps move. Capital markets now show a taste for small steps. A large cut might seem like a sign that the Fed waited too long, a view that fuels critics who say Powell acted “too late.”

The key issue goes beyond September. Whether the Fed makes more cuts later depends on new economic data, price trends, and shifts in market and political views. Powell is expected to show he welcomes more cuts while warning that inflation stays above the target. In the services sector, inflation now holds at 3.8%.

Inflation Outlook and Economic Challenges

Inflation may come down next year, but several risks remain. Higher tariffs, a strong economy, and loose fiscal plans add pressure. Core inflation stays high at 3.1% year-over-year, marking a multi-month peak. These factors make more rate cuts a clouded option.

Political Influences on Fed Independence

Market watchers see rising political pressure on the Fed. President Donald Trump has asked for a swift 300bps reduction in rates. A Trump supporter, Stephen Miran, now helps guide the Fed board. Moves to remove key governors make some worry about the bank’s freedom.

This political push might steer monetary policy toward a softer side. A softer policy could hurt long-run price and money stability. It might also weaken the U.S. dollar, a change that could speed up the switch away from the dollar.

Conclusion

The Federal Reserve stands at a clear fork: acting fast risks a return of high inflation, while waiting might slow growth amid job market worries. Stakeholders will watch closely for the Fed’s hints in the coming days and months as it tries to keep the balance between growth support and price control.

About the Author:
Dennis Shen, CFA, is the Chair of the Macroeconomic Council and Lead Global Economist at Scope Ratings, Berlin, Germany.

For ongoing updates about economic events, visit our economic calendar.

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UK Services Inflation Eases: Implications for BoE Rate Cuts and GBP/USD Trends

UK Services Inflation Softens, Increasing Chances of Bank of England Rate Cut in Q4; GBP/USD Dips

By Bob Mason | Published: September 17, 2025, 06:16 GMT

UK inflation data now shows that prices in the services sector fall. This drop may push the Bank of England to cut rates. The British pound moves oddly against the US dollar as markets watch the BoE’s next step.

UK Inflation Data Highlights

In August 2025, UK services inflation moves down to 4.7% from 5.0% in July. This drop points to easing price rises in a sector that holds over 70% of the country’s GDP. Core inflation, which leaves out energy, food, alcohol, and tobacco, falls from 3.8% in July to 3.6% in August. At the same time, the yearly headline Consumer Price Index (CPI) stays at 3.8%.

Data from the Office for National Statistics shows the CPI for owner-occupiers’ housing costs (CPIH) rises 4.1% over the past year to August. This is slightly lower than the 4.2% rise in July. Air fares pull the rate lower, while restaurant, hotel, and motor fuel prices push it up. Core CPIH also drops a bit from 4.2% to 4.0% in August.

Implications for Bank of England Policy

The fall in services inflation, and especially in core prices, may shape the BoE’s next choices. Past fears of high services inflation kept rate cuts at bay. New numbers now might show a different path.

Yet, the economy shows mixed signs. Early September data show wages rise at a faster pace. Average earnings, including bonuses, climb to 4.7% in the three months to July, up from 4.6% in June. The unemployment rate stays at 4.2%, a sign of a tight job market that keeps demand and prices near their levels.

Economists see a split in the upcoming BoE meeting on September 18. Two votes stand ready to lower rates while seven votes hold at 4%. Market scouts watch these numbers. More votes for a cut could push up the chance for a move in November. A clear rate cut will depend on a faster drop in inflation and wage gains in the September reports.

ING Economics notes: "Private sector jobs fell more in August. This may push wage growth below 4% by year-end. That route may allow a BoE cut, though our call for a November drop still hangs in question."

GBP/USD Reaction

After the new inflation numbers came out, the GBP/USD pair shows soft moves. It drops to 1.36369 before the news, then rises briefly to 1.36589 early Wednesday. When the numbers come out, the pair edges to 1.36526 and settles near 1.36419. By mid-morning on September 17, the pair sits close to 1.36456. This calm shows market care amid mixed signals.

Economic Data to Watch and Market Outlook

Investors now watch the BoE decision on September 18 very closely. Soon, UK retail sales will appear on September 19 while the Services Purchasing Managers’ Index (PMI) comes on September 22. These numbers will play a role in the Bank’s view and steps ahead.

UK retail sales are expected to rise by 0.4% in August after a 0.6% move in July. Good retail data may lessen the chance for easing in the fourth quarter, but weak numbers may give more room for a rate drop.

The Services PMI is seen to fall from 54.2 in August to 51.7 in September. A clear slowdown in services, along with some job cuts and lower price changes, might support a rate drop in November.

Conclusion

The drop in UK services inflation ties into important choices for the Bank of England as it finds a balance between holding down inflation and supporting growth. Wage trends stay a worry, but the softer numbers raise the chance for a rate cut in the last quarter of 2025. Traders now watch for upcoming data and clear signals from the BoE on its next steps.

Keep up with in-depth insights on BoE moves, GBP trends, and global market changes on FXEmpire.

About the Author:
Bob Mason is an experienced financial reporter with over 28 years covering currencies, commodities, and stocks across European and Asian markets. He has worked at global rating agencies and large banks, giving clear views on world market trends.

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UK Wage Growth Sparks Inflation Concerns and GBP/USD Rally: What It Means for BoE Policy

UK Wage Growth Strengthens Inflation Outlook, Delays BoE Policy Easing; GBP/USD Rises

September 16, 2025 — By Bob Mason

UK labor market data shows strong wage gains. The data makes inflation worries grow and slows any change in BoE rates. At the same time, traders drive the British pound higher against the US dollar.

Rising Wages and Steady Unemployment Signal Inflation Risks

The Office for National Statistics shows that wages grew by 4.7% over the three months ending in July. The rate edged up from 4.6% in June. These numbers add to a strong labor market. They may lead to more spending, which can push prices up.

Unemployment stayed at 4.7% in July. The result helps explain the overall health of the labor market. However, fewer people worked on a payrolled basis. In July, the count dropped by 6,000. Compared to July 2024, the loss was 142,000. Early numbers for August show a fall of 8,000 payrolled workers.

The report shows that job vacancies have fallen month after month for 38 months in a row. Between June and August 2025, vacancies dropped by 10,000. Fewer claimants made requests in July. Yet, the total claim numbers stay lower than last year. They stand at 1.686 million.

Implications for Bank of England Policy

This data puts the Bank of England in a hard spot. Wage gains and steady jobs keep consumer faith high. High spending can push demand and prices up.

Inflation numbers from earlier this month add to this view. In July, the annual headline rate climbed from 3.6% to 3.8%. Core inflation also stood at 3.8%. Both rates sit above the Bank’s 2% target. Markets now see less chance for a rate cut soon.

Economists at ING note that August inflation data may show a small drop in basic price moves. Yet, strong labor figures point to a steady policy stance. The next BoE meeting comes on Thursday, September 18. —

Currency Market Reaction: GBP/USD Rises on Hawkish Sentiment

The strong labor data gave the British pound a lift. The GBP/USD rate rose from a low near $1.35920 to a high at $1.36275. It then fell a bit. In the morning session on September 16, GBP/USD stayed near $1.36249. This gain of 0.19% marks the day.

Investors now expect that the Bank of England will hold its current stance. The steady wage growth and weighty inflation data push them toward a firm tone at the BoE.

Looking Ahead: Inflation Data and Economic Indicators in Focus

Market watchers will soon see the UK inflation report due on September 17. Analysts expect headline inflation to remain near 3.8% while core inflation may slip to 3.6%. If inflation falls more than most expect, some may hope for a rate cut in November. Such a change could put pressure on the pound.

UK retail sales data on September 19 will also show more about how consumers spend in this price environment.

Summary

• UK wages grew 4.7% in the three months ending in July, up from 4.6% in June.
• Unemployment held at 4.7%.
• The number of payrolled employees fell month over month, and job vacancies have dropped for 38 consecutive months.
• Inflation remains above the Bank of England’s target, both in headline and core measures.
• Fewer market views see a near-term policy change at the BoE because of strong labor data.
• GBP/USD rose to about $1.3625 on a firm market tone.
• Upcoming inflation and retail sales data may shift views on future policy.

Policymakers and investors now await new inflation numbers and other signs of economic direction. They watch all moves closely as the Bank of England plans its next rate decision.

Bob Mason is a financial journalist with over 28 years of experience. He covers global markets, including currencies, commodities, and equities, with a focus on European and Asian economies.

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China’s Economic Struggles: Trade Talks Intensify Amidst Rising Unemployment and Urgent Need for Policy Support

China Growth Wobbles as Trade Talks and Policy Support Take Center Stage

By Bob Mason
Published: September 16, 2025, 01:23 GMT+00:00

China’s economy shows weakness amid tough trade talks and domestic tests. New data and market signs report lower growth, higher costs, and weaker spending. This news brings more calls for clear fiscal actions to support the world’s second-largest economy.

Economic Growth Hits Speed Bumps

China’s industrial output grew 5.2% in August compared to last year. This growth falls from July’s 5.7% mark and a high of 7.7% in March. Tariffs and soft demand work together to slow down manufacturing. Lower output growth makes firms worry about profit ties and may slow the whole economy.

Margin Squeezes and Rising Unemployment

Surveys from the manufacturing and services groups show sharp changes. Rising costs force private companies to cut prices and thin their profit margins. To handle these costs, many companies cut jobs. This push raised the unemployment rate from 5.2% in July to 5.3% in August.

Young workers suffer most in this struggle. Youth unemployment climbed from 14.5% in June to 17.8% in July. This gap adds to job challenges and demands clear policies to boost new work chances.

Consumption Slumps Amid Economic Pressures

Higher unemployment and dropping house prices work to slow private spending. Retail sales growth fell from 6.4% in March to 3.4% in August. With less money in hand, consumers spend less and feel less sure.

This trend puts Beijing’s 5% GDP goal at risk. Falling house prices hurt consumer trust. Policy moves to steady the housing market and spur job creation, especially for young workers, are now vital.

Urgent Calls for Targeted Fiscal Stimulus

Experts at Goldman Sachs ask for more focused easing measures. They point to weak local demand and ongoing soft areas in the labor and property sectors. Floods in early August, limits on construction ahead of a military parade, a falling property market, and strict moves against price fights add pressure to the economy.

Trade Talks Under Pressure

China faces these issues as trade talks happen in Madrid. The United States, European Union, and Mexico press hard on tariffs. Such moves may slow down China’s export boost. For example, Mexico plans to place a 50% tariff on auto imports. This change adds to the hurdles for Chinese sellers.

US Treasury Secretary Scott Bessent mentioned that the US-China tariff break could stretch 90 more days before the November 10 end date. He noted the firmness of Chinese negotiators. At the same time, China’s trade chief Li Chenggang showed progress on a TikTok agreement yet said China stands firm on its business interests.

A high-level call between US President Trump and Chinese President Xi Jinping set for September 19 may shift talks. A key point is whether Beijing will cut down on Russian oil buys in return for tariff help. This idea came after a Shanghai Cooperation Organization meet. Even if Beijing keeps its foreign view strong, a little opening in stance is not ruled out.

Policy Initiatives and Market Response

Inside the country, China moves to boost the service scene and fix market gaps. President Xi Jinping wrote an article urging efforts to join the national market, stop low-price fights, close old factories, and fix tax and loan laws. These shifts aim to clear up market issues, fuel fair fights, and push a spending-based growth plan.

Even with these tests, Chinese stock markets show strength. The CSI 300 and Shanghai Composite indices have both risen about 15%, following a rise similar to the Nasdaq Composite. The Hang Seng Index has soared by 31.8% this year, showing high interest in China stocks.

Trade tensions, a weak housing scene, and soft demand still trouble investors. Continued tariff fights and a slower economy may cause more job cuts and less spending. This trend could weigh on risk assets soon.

Looking Ahead

As China deals with these hard tests, policy makers feel pressure to add fiscal and monetary support while handling trade ties in a changing worldwide scene. The results from trade talks, efforts to steady the housing market, and steps to boost work and spending will shape China’s pace in the months to come.

The situation remains a key watch for global markets and policy makers. Observers keep a close eye on shifts in trade rules and Beijing’s home reforms in the days ahead.

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China’s Retail Sales Disappoint: Economic Growth Concerns Impact Currency and Markets

China Retail Sales Miss Forecast, Growth Concerns Resurface; AUD/USD and Hang Seng Retreat

By Bob Mason
Updated: September 15, 2025, 02:55 GMT

In August 2025, China’s retail sales did not meet the forecast. Sales grew by 3.4% year-on-year in August. The expected growth was 3.8%, and July had seen a rise of 3.7%. This gap in consumer spending adds worry about the strength of China’s economy.

Unemployment rose in June, moving from 5.2% in July to 5.3%. The rise in joblessness makes the labor market seem weaker. This trend may lower consumer trust and spending, which are key to the economy.

Housing prices have dropped for four months in a row. Used home prices fell 0.58% from the previous month, a larger drop than in July. New home sales also fell. Year-on-year, house prices decreased by 2.5% in August. Although this is a slight improvement from July’s 2.8% drop, it still worries market watchers. Stocks in the real estate field felt the impact, with the Hang Seng Mainland Properties Index falling by 1.25% during early trading on Monday.

Industrial output grew at 5.2% year-on-year in August. This is slower than July’s 5.7% and below the expected 5.8%. Export performance also slowed, dropping from 7.2% in July to 4.4% in August amid tariff effects.

Investors acted quickly on the news. The Hang Seng Index fell to 26,420 on September 15 before a small recovery to 26,450. The Australian dollar went down against the US dollar; AUD/USD dropped from 0.66584 to 0.66551, then bounced back slightly to 0.66552. US-China trade tensions add to the doubt. Trade talks picked up briskly in Madrid. The talks cover tariffs and issues including TikTok’s future. This situation adds more uncertainty for investors.

Looking ahead, China faces hard challenges in reaching its 5% GDP growth target for 2025. Weak consumption, a stressed labor market, and lower exports all work against this goal. Market watchers now keep a close eye on policy steps in housing, spending, and jobs. At the same time, the path of US-China trade talks stays key. Progress on tariffs may bring needed support to local markets while rising disputes may worsen the challenges.

Investors and traders are urged to keep a careful view given the latest news and global developments.

About the Author

Bob Mason brings over 28 years of experience in the financial sector. He has worked with global rating agencies and multinational banks. His work centers on currencies, commodities, alternative asset classes, and equities, with a focus on markets in Europe and Asia.

For more updates on market trends, economic numbers, and policy changes, stay tuned to FXEmpire’s full coverage.

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UK Economy Stalls: BoE’s Rate-Cut Challenge and GBP/USD Response

UK Economy Loses Momentum, BoE Faces Tough Rate-Cut Dilemma; GBP/USD Dips

By Bob Mason | Updated: September 12, 2025, 06:20 GMT+00:00

Recent UK data shows growth slowing in July. The report forces the Bank of England to decide: keep high rates as inflation stays high, or ease policies amid weak growth. The GBP/USD pair fell a bit when the GDP figures were released.

UK GDP Growth Stalls in July

The UK economy slowed in July. In June, the economy grew by 0.4%, but in July the overall GDP stayed the same. The Office for National Statistics shows that the month ended with no growth.

Monthly, services output barely increased by 0.1% in July after a 0.3% gain in June. Production dropped by 0.9% in July after growing 0.7% in June. Manufacturing, a large part of production, fell by 1.3% in July after a 0.9% rise in June. These closer links between data points raise a worry about the UK’s economic strength.

Over the three months ending in July, GDP growth slowed to 0.2%, down from 0.3% for the three months ending in June. These changes show a broad slowdown.

Inflation Presents a Policy Puzzle for the Bank of England

The slowdown appears when inflation is still high. Headline inflation rose to 3.8% in July, up from 3.6% the month before. Core inflation also climbed. The inflation rate for services went up to 5% year-on-year in July from 4.7% in June. With services affecting the overall count more, this rise makes the inflation picture harder to read.

BoE Governor Andrew Bailey noted, “There is now considerably more doubt about exactly when and how quickly we can move those further steps.” His words show that the timing and speed of any change remain unclear.

The job market is steady, with unemployment at 4.7%, and wages continue to grow. Some economists say the Bank may cut rates only when inflation and wages slow down more clearly.

Upcoming Data Will Influence the Outlook

Key UK numbers are set for mid-September. Inflation figures will come on September 15, and labor market data will follow on September 17. If these reports show a clear drop in inflation and slower wage growth, market views of a November rate cut may gain strength.

GBP/USD Market Reaction

After the GDP data came out, the GBP/USD pair slipped. Before the report, the pair briefly rose to $1.35804, then dropped to a low of $1.35496. By September 12, it was about 0.15% lower at $1.35507. The BoE’s tough decision contrasts with views that the U.S. central bank may cut rates next week. This split in paths may push the GBP/USD pair below the $1.35 level if the BoE decides to cut rates.

Conclusion

The UK economy’s weak growth in July and rising inflation have put the Bank of England in a tight spot. Slow GDP would normally call for lower rates, but stubborn inflation in the services sector and a steady job market mean any cuts may wait until there is a clear sign of easing. Traders and investors now watch the upcoming inflation and labor data for clues about the Bank’s next move and the future path of the British pound.

About the Author
Bob Mason has over 28 years of experience in the financial industry, covering currencies, commodities, alternative assets, and global equities with a focus on European and Asian markets.

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Surging U.S. Inflation Reaches 2.9% in August: The Impact of Shelter and Energy Costs

U.S. Inflation Reaches 2.9% in August, Fueled by Rising Shelter and Energy Costs

By James Hyerczyk | Updated: September 11, 2025, 12:39 GMT

Recent U.S. inflation data shows consumer prices growing fast. The CPI went up 0.4% in August—a jump twice as big as in July. Over the past year, inflation reached 2.9%, up from 2.7% in July. Higher costs in housing, food, and gasoline play a large role. These higher prices spur talks on how the Fed will act next.

CPI Growth Shows Continued Price Pressure

The CPI increase of 0.4% comes in sharper than many expected. Shelter costs lead this rise. In August, shelter prices climbed 0.4% and are 3.6% higher over the year. This data confirms a tight housing market. The core CPI, which ignores food and energy, grew 0.3% this month and rose 3.1% over the year. Price pressure spreads through the economy.

Within core measures, rent for homeowners increased 0.4% while primary rent went up by 0.3%. Airline fares jumped 5.9% from last month. Prices for used cars rose 1.0%, and apparel prices grew 0.5%. In contrast, medical care costs fell 0.2%, with lower dental and drug prices giving slight relief amid rising costs elsewhere.

Food Prices Rise, Driven by Grocery Gains

Food prices also climbed in August. The food index grew 0.5% and food-at-home prices increased 0.6%. All six major grocery groups saw price hikes. Fruit and vegetable prices jumped by 1.6%, with tomato prices up 4.5% and apple prices up 3.5%. Prices for meat, poultry, fish, and eggs went up 1.0%, led by beef prices that rose by 2.7%. This path pushes the annual food index up 3.2%, outpacing overall inflation.

Energy Prices Bounce Back on Gasoline Gains

Energy prices turned up by 0.7% in August after a drop in July. Gasoline costs rose 1.9% in a seasonally adjusted move, bouncing back from a 1.1% drop. Meanwhile, natural gas prices sank 1.6% and electricity prices edged up 0.2%. Over the year, energy inflation is low at 0.2%, with gasoline still 6.6% lower than last year.

Market Impact and Fed Policy Views

Sticky inflation, seen in core CPI and shelter costs, makes quick Fed rate cuts seem less likely. Many experts expect the Fed to keep rates steady at the September meeting. Rising costs in food and travel add to the price pressure. Investors watch bond yields and a strong U.S. dollar with care. Stock markets may face more risk as borrowing costs rise.

Market Outlook

Strong August inflation keeps the U.S. dollar firm against low-yield coins. Bond yields may continue to rise as the market adjusts to a longer period of high rates. Stock markets may see short swings as ideas of quick rate cuts fade and investors settle into a longer phase of tight money.

About the Author

James Hyerczyk is a seasoned U.S.-based technical analyst and educator with over four decades in market study and trading. He studies chart patterns and price moves deeply. He has written two books on technical analysis and knows much about stock and futures markets.

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Navigating the Tensions: China and the US Trade Showdown Amid Deepening Economic Strains

China Faces Trade Showdown as Tariff Truce Masks Deepening Strains

By Bob Mason
Updated: September 11, 2025, 02:45 GMT

Overview

The US and China set a trade pause. This break stops a steep tariff rise now. Under this calm, hard disputes grow. Tariff conflicts, supply chain issues, and rare earth problems still trouble both sides. These fights stress China’s plans for steady growth and shake market trust.

Trade Truce Extension: A Temporary Pause

In August 2025, US and China extended their trade calm for 90 days. This step stops the start of a 145% tariff on many Chinese goods. The pause does not solve other trade issues. In Geneva, both sides met for two days. China agreed to lift some limits on rare earth exports. The US agreed to ease rules on semiconductor chips. Later talks in London and another break did little to clear mistrust or bring a full trade plan.

Rising Geopolitical Pressures

US moves against China get more complex. The US added tariffs to fight against goods sent through third countries. Firms forward goods from Vietnam and Indonesia to avoid steep fees. Vietnam now pays a 40% tariff on some shipments, and Indonesia pays a 19% fee. Vietnamese exports to the US dropped by 2% in August. At the same time, Vietnamese imports from China also fell by 2%. Rumors spread about US plans to require firm proof of product origin. Such steps could hurt China’s trade edge.

US officials also pressured the European Union to set 100% tariffs on some goods from China and India. This push aimed to cut Russian oil purchases and nudge Moscow on the Ukraine matter. The call came during a meeting of the Shanghai Cooperation Organization, where leaders like Russian President Vladimir Putin and Indian Prime Minister Narendra Modi appeared.

US officials reopened trade talks with India. Former President Trump spoke of ending trade blocks. This change may lower India’s Russian oil buys and shift how its economy links with China.

Chinese Economy Under Stress

Trade fights now hurt China’s economy. Its exports to the US fell 33% compared to last year in August. Growth slipped from 7.2% in July to 4.4% in August. Unemployment climbed from 5.0% to 5.2%, while jobless numbers among the young jumped from 14.5% to 17.8%. These shifts hit workers hard.

Lower sales in shops now worry many about hitting a 5% growth target. In response, the government plans new help for workers and trade. On September 10, the National People’s Congress met. Leaders stressed using the budget to bring back balance to the economy.

Economist Robin Brooks from the Brookings Institution said, "China loses ground. Its US exports dropped 24% in one quarter. Exporters must choose: shift goods or cut prices. Both paths hurt earnings and push prices down."

Mainland Markets Stay Steady

Despite the stress, Chinese stock markets hold up well. The CSI 300 and Shanghai Composite Index rose near 13%. The Hang Seng Index climbed over 30%. Local buyers and money from abroad keep the markets active.

Beijing works to keep the economy safe. Yet trade talks, a housing crisis, and weak local buying still risk the future. A shaky job market can slow spending and mind share.

A solid trade deal with the US might boost exports, raise company profits, grow jobs, and lift spending. That boost would support growth and push stocks higher.

The Road Ahead

Investors watch as China plans to share new data soon. Reports on retail sales and industrial output will appear on September 15. Those numbers will show if a small stumble starts a larger drop.

If spending and output rise, market hope may grow fast. Stocks could hit high levels in 2025. But if low news continues and prices fall, Beijing may miss its goals and need more policy moves.

With trade fights still burning and political stress on the rise, China stands at a turning point. How it balances trade plans and wins back market trust will shape its future and that of the global scene.

Contact: For more updates on the US-China trade scene and market views, stay tuned to FXEmpire.

Related Reads:

  • "China Ready for Global Pivot as US Trade Tensions Deepen Economic Risks"
  • "US Jobs Report Misses Forecast: Weak Nonfarm Payrolls Signal Labor Market Cooling"
  • "Surprise Drop in PPI Strengthens Case for September Fed Rate Cut"

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