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
- U291cmNlOiBGYWN0c2V0LCAxMCBKdWx5IDIwMjUuIFVTIGRvbGxhciB0ZXJtcy4g
Words of wisdom
Graphics processing unit: A graphics processing unit, or GPU, is a type of microchip used to accelerate digital image processing and computer graphics – and today much more. Initially associated with computer games, their ability to manage sophisticated computing needs has meant that they are now a huge part of the generative artificial intelligence boom. Last week US chipmaking giant, Nvidia, an early mover in this space, saw its stock market value push through the $4trn mark during intraday trading – making it the first public company ever to hit the milestone.
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.
Disclaimer
This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales, No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ.
In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.
© 2025 AXA Investment Managers. All rights reserved
Risk Warning
The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested.