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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: 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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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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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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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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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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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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