Stock markets in Asia experience a surge following a record-breaking rally in U.S. stocks, fueled by optimism towards potential interest rate reductions.
Headline: U.S. Inflation Remains High, Fed Cautious Amid Trade Tensions and Tariffs
In July 2025, U.S. consumers faced a 2.7% increase in the cost of living, according to recent data. This figure, which is the same as June's rate, was lower than the 2.8% that economists had predicted.
The persistently high inflation, partly driven by tariffs and import duties, has raised concerns for the Federal Reserve (Fed). The Fed's minutes from its July 2025 meeting indicate that policymakers are more worried about upside inflation risks, particularly those stemming from tariffs, than downside risks to employment.
This risk assessment contributed to the decision to keep interest rates steady at 4.25%-4.5% in their last meeting, despite some dissent favoring a rate cut. The Fed's cautious stance reflects worries that inflation remains "sticky" above the 2% target and that additional price increases may be forthcoming.
The current core inflation rate stands at around 3%, above the Fed’s 2% target. This inflation dynamic, along with the ongoing trade tensions between the U.S. and China, is likely to influence the Fed’s interest rate decision at its September 2025 meeting. The Fed will receive one more report on inflation and another on the U.S. job market before its next meeting, which ends on September 17.
Meanwhile, global stock markets have shown mixed results. In Japan, the Nikkei 225 advanced and set a new record, gaining 1.6% on Wednesday. Strong buying of computer chip-related companies and other exporters was driven by relief over the Trump administration's confirmation that its exports will face a flat 15% U.S. import duty.
Elsewhere in Asia, Taiwan's Taiex, India's Sensex, South Korea's Kospi, and Hong Kong's Hang Seng all recorded gains. Shares in Hong Kong, Singapore, and Malaysia also rose more than 1%.
The U.S. dollar rose to 147.94 Japanese yen, and the euro climbed to $1.1686. U.S. benchmark crude oil edged 4 cents higher to $63.21 per barrel, and Brent crude rose 8 cents to $66.20 per barrel.
In other news, Circle Internet Group, a company behind the USDC cryptocurrency, climbed 1.3% despite reporting a larger loss for the latest quarter than analysts expected. The recent jobs report was weaker than economists expected.
The ongoing trade negotiations between the U.S. and China have also had an impact on the global economy. In a significant development, China and the U.S. agreed to extend by 90 days the pause in drastically higher tariff rates to allow more time for talks on a broad trade agreement.
This extension is likely to provide some relief to both economies, as it reduces the immediate pressure of escalating tariffs. However, the final outcome of these negotiations remains uncertain, and the potential for further tariff increases continues to cast a shadow over the global economy.
[1] "U.S. Inflation Rate Holds Steady in July" - The Wall Street Journal, August 2025. [2] "U.S. and China Agree to Extend Trade Talks" - Reuters, August 2025. [3] "Nikkei 225 Hits New Record" - The Japan Times, August 2025. [4] "Fed Minutes Show Caution Over Inflation" - The New York Times, August 2025.
- Despite the persistent rise in inflation and trade tensions, U.S. businesses are still seeking job candidates for various positions in real estate, finance, technology, entertainment, and other sectors.
- With the economy's unpredictable fluctuations, some investors are turning to the stock-market for potential profits, while others are investing in smartphones, gadgets, and other consumer electronics brands.
- In Seattle's booming tech hub, local businesses are grappling with the high inflation rates, pushing for policy-and-legislation changes to address the concerns, impacting both the city's economy and employment sector.
- Despite positive outcomes in global stock markets and the extension of trade talks between the U.S. and China, concerns about crime-and-justice issues have dominated the general news, overshadowing the positive sentiment.
- As technological innovations continue to reshape industries, small and medium-sized businesses are exploring new ways to leverage social-media platforms for marketing and advertising their job opportunities, products, and services.
- With the U.S. inflation rate still above the Fed's target, some consumers are reconsidering their spending habits, choosing to hold off on major purchases like homes or new cars to save for future financial uncertainties.
- Local real estate agents report a growing trend of investors turned home-buyers, aiming to secure stable long-term rental income due to the high inflation rates and increasing rental prices.
- Recent U.S. policy-and-legislation moves have aimed to stimulate the economy, with a focus on tax cuts and infrastructure investments, but observers question their long-term impact as the trade tensions persist.
- As the upcoming September Fed meeting approaches, many are wondering whether the ongoing trade tensions and tariffs will prompt the Fed to take further action to combat the sticky inflation, potentially impacting interest rates, employment, and the overall business environment.
