Take two: Fed cautions over tariffs; China’s CPI moves into growth territory
- 14 July 2025 (3 min read)
What do you need to know?
A majority of Federal Reserve (Fed) policymakers cautioned that US tariffs could have “more persistent effects on inflation”, according to the latest policy meeting minutes, which also indicated that an interest rate cut at July’s meeting is unlikely. Participants generally agreed that, with economic growth and the labour market “still solid” and “current monetary policy moderately or modestly restrictive, the committee was well positioned to wait for more clarity on the outlook for inflation and economic activity”. In June, the Fed left rates unchanged at 4.25%-4.50%. Meanwhile, US President Donald Trump extended the 90-day pause on his reciprocal tariffs, pushing the deadline back to August 1 and announced new levy rates for some nations.
Around the world
China’s consumer price index (CPI) inflation rate for June came in at 0.1% year-on-year, marking its first positive reading since January, and up from -0.1% in May. The seasonally adjusted inflation rate was estimated at 0.11% month on month in June, its steepest since September last year. The recovery from May saw core CPI (which excludes more volatile food and energy prices) rising to 0.7%, its fastest pace since April last year, and up from 0.6% in May. However, despite June’s rise in CPI, producer prices continued to fall, with factory gate inflation at -3.6% year on year, down from -3.3%.
Figure in focus: $100bn
European equity funds have enjoyed inflows of over $100bn so far this year, a threefold increase on the same period in 2024. In contrast, US equity portfolio outflows more than doubled to nearly $87bn, according to data from LSEG Lipper Funds, indicating a continued regional preference for Europe over the US. While the US market has witnessed some strong performance in recent weeks, year to date the MSCI Europe index is up 25% while the US’s blue-chip S&P 500 index is ahead by 8%.1
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Words of wisdom
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What's coming up?
Inflation updates will be in focus this week. On Tuesday, both the US and Canada post their latest inflation readings, followed by the UK on Wednesday, and the Eurozone and Japan, on Thursday and Friday respectively. In terms of other economic updates, China's second quarter (Q2) GDP growth rate is issued on Tuesday – it expanded 5.4% year-on-year in Q1, matching Q4’s rate. Tuesday also sees the latest Eurozone ZEW Economic Sentiment Index reported, which reflects expectations of the bloc's six-month economic outlook. The UK publishes unemployment numbers on Thursday.
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