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Major Banks Lower Prime Rate to 4.70%: What It Means for Canadians Following Central Bank’s Cut

Canadian Banks Lower Prime Rate to 4.70%, Following Bank of Canada Rate Cut

September 17, 2025 – The Bank of Canada cuts its main rate. In response, Canadian banks lower their prime rate. They set it at 4.70% starting September 18. This rate drops 25 basis points from 4.95%. The change follows a quarter-point cut by the central bank to 2.5%.
• Banks act after the Bank of Canada signals a softer monetary plan.
• Royal Bank of Canada, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, Bank of Montreal, Desjardins Group, National Bank of Canada, Laurentian Bank of Canada, Equitable Bank, and Bank of Nova Scotia agree with the move.

Impact of the Rate Cut

The prime rate guides many loans across Canada. It affects mortgage rates, personal loans, credit cards, and other variable-interest deals. Lowering the rate to 4.70% should ease borrowing costs. Consumers and businesses with variable loans may find relief in tighter conditions.
Analysts view this change as a quick fix for slowing inflation and steady economic growth. Banks and the central bank work together to boost spending and investments.

What Borrowers Should Know

Variable-rate borrowers will see lower charges soon. Homeowners with variable mortgages might pay less each month if their lender passes on the cut.
New borrowers may soon get better loan terms. Experts advise that borrowers watch future monetary moves. Banks may change rates again if economic data shifts.

Conclusion

Canada’s major banks now lower the prime rate. Their decision follows the Bank of Canada’s rate cut. This step shows a clear link between central bank actions and commercial lending. The goal is to ease credit and support the economy amid current challenges.

For more in-depth coverage and analysis, readers are encouraged to subscribe to the Financial Post, which provides ongoing updates on economic policy, market trends, and financial news across Canada.

Photo credit: Wikimedia Commons – Bank buildings in Toronto’s Financial District

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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.

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Heavy Truck Sales Plummet: Is the U.S. Economy Heading for a Recession?

Heavy Truck Sales Plunge—Is the U.S. Heading Toward a Recession?

September 17, 2025 — New data shows U.S. heavy truck sales fall fast. The U.S. Bureau of Economic Analysis reports that trucks weighing over 14,000 pounds now sell at levels unseen in four years.

Steep Decline in Heavy Truck Sales

In August 2025, truck sales dropped by over 15% from last year and by 21% compared with August 2023. This steep fall pulls worry from both economists and investors. Heavy trucks like tractor-trailers act as signs of industry strength. When truck demand grows, the manufacturing and construction scenes gain. When sales fall, the economy may slow down and enter a recession phase.

Historical Context and Economic Implications

Joe Brusuelas, chief economist at RSM, calls the trend important. He writes that the drop began in 2023 and needs a close look by policymakers.

  • During the Global Financial Crisis, truck sales dropped by more than 67% from their 2006 peak to the 2009 low.
  • In the early 2000s, as the dot-com burst hit, sales fell nearly 50% from late 1999 until 2002. These past numbers show a strong link between truck sales and overall economic work. Lower truck sales can come before a recession.

Is This a Traditional Signal or Something New?

Not all experts agree that lower truck sales clearly signal a coming recession. Paul Hickey, co-founder of Bespoke Investment Group, points out that the drop marks a slowdown in manufacturing. He also sees that today’s economy may work in different ways.

Hickey notes that while truck sales fall, the U.S. economy still grows. He sees a shift from manufacturing work toward more service and digital work. Many businesses now use online methods and technology as much as they rely on heavy industry.

As Hickey states, "Falling sales are often a recession indicator. The key word is often." His view reminds us that truck sales once gave a clear picture of the economy. New tech, like artificial intelligence and digital work, may change this picture.

What Lies Ahead?

Even after this drop, truck sales had returned near their peak after the pandemic. This makes the current fall stand out and may point to wider issues in the economy.

Investors and lawmakers now watch the next economic data. They want to know if this drop will pass or grow into a bigger issue.

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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 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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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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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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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.

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