International News 31 July 2025
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Cooling Inflation in Australia Fuels Bets on Imminent RBA Rate Cut
Consumer prices in Australia grew at their slowest pace in over four years in Q2 2025, reinforcing market expectations that the Reserve Bank of Australia (RBA) may cut interest rates as early as next month. According to data from the Australian Bureau of Statistics on Wednesday (July 30), the Consumer Price Index (CPI) rose just 0.7% for the quarter, slightly below the 0.8% forecast. On an annual basis, CPI inflation eased to 2.1%, down from 2.4% in the previous quarter—falling beneath economists’ projections. Core inflation also showed signs of softening. The trimmed mean CPI, closely watched by the RBA, increased 0.6% for the quarter—below the 0.7% expected—while the annual rate slowed to 2.7% from 2.9%, landing more firmly within the RBA’s 2%–3% target range. The data suggest that the central bank may shift to a more accommodative stance after aggressively raising rates since 2022 to tame inflation, potentially marking a policy turning point in the months ahead.
Euro Steady Near One-Month Low as Markets Eye Fed and BOJ Decisions
The euro held near its lowest level in a month on Wednesday (July 30, 2025), stabilizing at $1.1558 after recent sharp declines. Investors remain cautious amid a flurry of geopolitical and monetary policy developments, including trade agreements between the U.S. and both the EU and China. While the EU-U.S. deal was welcomed, analysts view it as symbolic and skewed toward American interests. Meanwhile, U.S. and Chinese officials agreed to pursue a 90-day tariff truce extension, pending President Trump’s approval, adding to the uncertain global trade landscape. Market attention now shifts to key central bank decisions. The Federal Reserve is expected to hold rates steady for the fifth time since December, but growing political pressure from President Trump and potential dissent within the FOMC could weigh on the dollar’s outlook. The BOJ is also anticipated to maintain its current policy, though recent U.S.-Japan trade progress has raised hopes for a rate hike later this year. The dollar index hovered at 98.815, near a one-month high, while other major currencies like the pound, yen, and Aussie dollar traded narrowly ahead of these announcements.
Singapore Holds Monetary Policy Steady as Growth Surprises and Trade Tensions Ease
The Monetary Authority of Singapore (MAS) opted to maintain its current monetary policy settings on Wednesday (July 30, 2025), defying partial market expectations for further easing. The decision followed stronger-than-expected Q2 economic growth and signs of easing global trade tensions. MAS will keep the current rate of appreciation of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy band unchanged, without adjusting its width or mid-point—its standard approach in place of conventional interest rate tools. In its statement, MAS noted that risks of a sharp global slowdown have diminished amid more stable financial conditions and recent trade agreements by the U.S. with key partners including Europe and Japan. Singapore’s economy grew 1.4% quarter-on-quarter in Q2, avoiding a technical recession. However, the central bank warned of a potential slowdown in H2 2025 as front-loaded exports taper off. While core inflation has significantly eased to 0.6% year-on-year in June, economists remain split on future policy direction, with OCBC and Maybank analysts highlighting both inflationary pressures from geopolitical tensions and the potential for stronger-than-expected GDP growth ahead.