July 18, 2025
Global markets opened today under mounting pressure from stubborn inflation and rising doubts over central bank independence in the U.S. June’s national Consumer Price Index rose by 0.3%, the largest monthly increase since January, driven largely by higher costs for imported goods like apparel, electronics, and home furnishings. This data lifted Treasury yields to their highest level in over a month and propelled the U.S. dollar to a four-month high against the yen, prompting investors to slash expectations for a September interest rate cut (Reuters, 2025).
Against this backdrop, Federal Reserve Governor Christopher Waller has joined the chorus calling for a 25-basis-point rate cut at this month’s Fed meeting, citing slowing growth and “tariff-induced inflation” as temporary. He signaled that a shift to a neutral monetary stance could follow if inflation cools without harming the labor market (Reuters, 2025).
Meanwhile, average Americans are turning to savings as higher borrowing costs continue to affect consumption and investment. According to the Atlanta Fed’s Sticky-Price CPI index, inflation for goods that change prices slowly climbed 4.3% annually, a notable increase, signaling that inflation pressures may linger longer than anticipated (Atlanta Fed, 2025).
In Australia, fresh labor data supports a similar story. The unemployment rate unexpectedly rose to 4.3% in June, up from 4.1% and exceeding market forecasts, prompting the Australian dollar to weaken and fueling strong speculation that the Reserve Bank of Australia will cut rates as soon as August (ABC News, 2025; The Australian, 2025).
Collectively, today’s data paints a layered picture: while inflation remains sticky, central banks in both the U.S. and Australia are grappling with policy credibility amid domestic and political forces. With upcoming U.S. Producer Price Index numbers and Fed commentary scheduled this week, investors should brace for continued volatility, this summer isn’t turning out to be as smooth as hoped.
Reuters. (2025, July 18). Morning Bid: Tariff imprint spied in US CPI. https://www.reuters.com/world/europe/global-markets-view-europe-2025-07-16/
Reuters. (2025, July 18). Fed’s Waller wants July interest rate cut amid rising growth, job market risks. https://www.reuters.com/business/feds-waller-wants-july-interest-rate-cut-amid-rising-growth-job-market-risks-2025-07-17/
Federal Reserve Bank of Atlanta. (2025, July 15). Sticky-Price CPI. https://www.atlantafed.org/research/inflationproject/stickyprice
ABC News. (2025, July 17). Unemployment rate rises to 4.3pc in June. https://www.abc.net.au/news/2025-07-17/unemployment-rate-australia-june-2025/105540858
