RBNZ Holds Cash Rate Steady at 3.25% Amid Fragile Recovery and Global Trade Risks

Economic

Summary:

New Zealand’s central bank maintained its cash rate at 3.25%, signaling a cautious path forward while inflation moderates and global uncertainties especially trade-related continue to weigh on the economic outlook....

Monetary Easing Paused as Central Bank Reassesses Recovery Conditions

The Reserve Bank of New Zealand (RBNZ) has decided to pause its monetary easing cycle, keeping the Official Cash Rate (OCR) at 3.25% in its latest decision. After a total of 225 basis points in rate cuts since August 2024, this marks the first hold since the current cutting cycle began. The central bank acknowledged that while inflation has fallen to 2.5%, geopolitical risks particularly trade tensions and tariffs require a more cautious stance before further loosening is implemented.

RBNZ policymakers made it clear that further rate cuts remain on the table, contingent upon continued easing of medium-term inflation pressures. According to the monetary policy statement, if these disinflationary trends persist, the central bank expects to lower the OCR further in line with projections from its May meeting.

Despite headline inflation moderating within the 1–3% target band, the uncertainty surrounding tariff impacts and the resilience of domestic demand introduces significant ambiguity. The bank emphasized that it will rely on incoming data to judge the speed of the recovery, the stickiness of inflation, and the full effect of global trade disruptions.

The causal relationship between global trade tensions and domestic inflation expectations is still unfolding. While New Zealand is not directly imposing new tariffs, the secondary effects such as reduced export demand or increased import costs could complicate the central bank’s disinflation objective.

Historical Tightening Cycle and Its Aftermath

New Zealand was among the first economies to roll back pandemic-era stimulus, having lifted interest rates by 525 basis points between late 2021 and 2023. The swift and aggressive tightening succeeded in halting runaway inflation but also dragged the economy into recession in 2024. Since then, a fragile recovery has begun to take shape, aided by lower interest rates and elevated commodity export prices.

However, that recovery remains uneven. While the tradable sector benefits from firm export prices, the non-tradable side of the economy especially household consumption and business investment still shows signs of strain. Global headwinds, including weaker international growth and tighter fiscal conditions, further weigh on momentum.

The central bank explicitly linked global developments with domestic growth prospects, stating that uncertainty in international policy environments and rising tariffs will likely act as a brake on global output, thereby slowing New Zealand’s recovery and reducing inflationary risks.

Forward Guidance and Market Expectations

Markets largely anticipated the RBNZ’s decision to hold, as 19 of 27 economists surveyed by Reuters had forecast this outcome. However, the tone of the accompanying statement suggests that the easing cycle is not over, only temporarily paused.

RBNZ forecasts inflation to remain near the upper bound of its target range throughout the second and third quarters of 2025. This projection, if met, would support the case for one or more additional rate cuts later in the year, provided global trade conditions do not deteriorate further.

The decision to maintain the current OCR reflects not only economic caution but also a strategic balance: preserving the option to ease policy while maintaining credibility in inflation targeting. The relationship between weakening global demand and reduced inflation pressure is central to this balancing act. However, any reacceleration in price levels due to tariffs or supply constraints could challenge the bank’s current trajectory.

RBNZ Walks a Fine Line Between Easing and Vigilance

The RBNZ’s decision to pause rate cuts signals a strategic recalibration rather than a change in direction. While inflation has cooled and the domestic economy is showing signs of stabilization, global uncertainty particularly concerning trade and fiscal environments remains a powerful variable shaping monetary policy.

With inflation nearing the top of its target band and growth still sluggish, the central bank appears committed to a flexible, data-driven approach. The months ahead will test whether external risks intensify or recede and whether the path to recovery is strong enough to justify further monetary accommodation.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

China–U.S. Trade War

Commodity

Uncovering the New Trade Routes in the Mineral War

Following China's December 2024 ban on exporting key minerals antimony, gallium, and germanium to the United States, recent trade data reveal that US companies continue to access these critical resources through indirect channels. Notably, exports of antimony oxides from Thailand and Mexico to the US surged between December and April, surpassing volumes seen over the past three years combined. This redirection illustrates the effectiveness of rerouting minerals through intermediary nations, sidestepping China’s restrictions without violating US law.

Since the ban took effect, Thailand and Mexico have emerged as major export hubs for Chinese antimony, rising from obscurity in 2023 to top positions by mid-2025. Neither country mines significant quantities of the metal and each only operates a single antimony smelter, further indicating that they are primarily transit points. Chinese customs data confirm that exports of antimony to these nations have increased sharply in 2025, coinciding with a proportional rise in US imports from them.

The causative factor behind this shift is China's restriction policy, which, instead of curbing global availability, has merely redirected supply routes. The correlation between China’s export licensing controls and the spike in intermediary country trade suggests that enforcement gaps are allowing continued flows to the US.

Evidence of Transshipment and Concealment

Several US importers and industry experts confirm that shipments are proceeding under alternative labels and routing methods. According to Levi Parker of Gallant Metals, gallium purchased from China is mislabelled as other goods such as iron or art supplies before being sent through third countries. Although this practice allows continued access to the mineral, it is expensive and logistically complex, with increased scrutiny limiting shipment sizes.

In particular, one company, Thai Unipet Industries a subsidiary of China's Youngsun Chemicals was documented shipping over 3,300 tons of antimony products to the US between December and May, a volume 27 times higher than in the same period a year earlier. These shipments were received by Texas-based Youngsun & Essen, a known importer of Chinese antimony prior to the ban. While the records do not confirm the origin of the raw materials, the scale of growth and the affiliations involved suggest a strong likelihood of Chinese origin minerals continuing to enter the US market through rebranding and third-party processing.

China's Legal Response and the Limits of Enforcement

In response to these rerouting strategies, China launched a crackdown in May targeting transshipment and smuggling of strategic minerals. The laws governing these exports hold Chinese sellers accountable for due diligence, including tracing the final destination of goods even if transactions occur abroad. Violations can lead to fines, export bans, or prison sentences exceeding five years in serious cases.

However, these legal mechanisms are only effective if enforced consistently. Experts such as Ram Ben Tzion of Publican emphasize that while regulations exist, their real-world application is often limited. The disparity between policy and enforcement reveals structural weaknesses in China’s control regime, which faces the dual challenge of maintaining national security while sustaining global demand-driven profit motives.

Price Incentives and Global Market Dynamics

Despite higher prices resulting from the ban, US imports of antimony, gallium, and germanium are on pace to match or exceed pre-ban levels. The market's response has been clear: where demand exists, supply chains will adapt, even at higher costs and legal risks. Profit margins on these scarce resources have risen dramatically, incentivizing continued trade regardless of the regulatory landscape.

While China's export data shows that its shipments remain below pre-restriction levels, the persistence of mineral flows to the US underscores the limitations of unilateral bans in globally integrated supply chains. The causal mechanism here is economic: restrictions raise prices, which then incentivize circumvention strategies, maintaining supply continuity through unofficial channels.

The Real Battle Lies in Enforcement, Not Policy

Beijing’s efforts to exert control over critical mineral flows highlight a fundamental tension between political strategy and economic reality. While it possesses near-monopolistic control over global production of certain minerals, its ability to enforce export restrictions remains imperfect. On the other side, US firms continue to demonstrate adaptability and resilience by leveraging indirect supply routes, ensuring minimal disruption to sectors reliant on these inputs.

As the geopolitical competition between the US and China intensifies, the trade in critical minerals will remain a key battlefield not just in terms of access, but also in the global contest of regulatory enforcement versus market creativity.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

RBA Cautions Amid Heightened Global Uncertainty

The Reserve Bank of Australia (RBA) has chosen to maintain its cash rate at 3.85% during its latest policy meeting, defying market expectations for further tightening. This decision underscores a cautious stance from the central bank as it navigates growing international uncertainties, particularly those tied to the evolving US tariff regime. According to Deputy Governor Andrew Hauser, the global landscape is currently marked by heightened instability, and developments in American trade policy are commanding close attention from the Australian monetary authority.

Hauser emphasized that while the impact of these US tariff changes on Australia is still in the early stages, the RBA is not taking their potential lightly. Unlike in the United States and parts of Europe, where business and consumer confidence has seen a notable decline, sentiment within Australia’s domestic economy remains relatively stable for now. This difference may reflect the time lag between policy announcements abroad and tangible effects on Australian markets.

The relationship between US tariff measures and the Australian economy at this stage appears to be more of a correlation than a direct causation. However, should the trade environment deteriorate further through escalated tariffs or retaliatory measures Australia could begin to experience more pronounced economic spillovers, particularly in trade-sensitive sectors such as agriculture and manufacturing.

Why the RBA Is Pausing Despite Inflation Concerns

The RBA’s decision to pause rate hikes stems from an internal majority that prefers to wait for clearer data confirming a sustained slowdown in inflation. Although price pressures remain elevated, the central bank believes it prudent to assess whether previous monetary tightening has begun to have the intended dampening effect on inflationary trends. This approach reflects a more data-dependent strategy, rather than pre-committing to a set path of interest rate adjustments.

Such a stance suggests that the RBA is attempting to balance two competing risks: tightening too much and choking off economic growth, or doing too little and allowing inflation to become entrenched. In this context, the uncertainty stemming from US policy actions adds a further layer of complexity, reinforcing the case for a more measured pace.

Market Reactions and Economic Outlook

Financial markets were caught off guard by the RBA’s decision, having priced in at least one additional hike before year-end. The central bank’s caution signals a shift toward patience as global developments unfold. Nevertheless, the tone from Deputy Governor Hauser makes it clear that vigilance remains high, and any acceleration in global trade disruptions or domestic inflation data could reignite policy tightening.

In conclusion, the RBA is entering a phase of careful observation. Its attention to US tariff developments is not merely reactive but part of a broader attempt to anticipate secondary effects on Australia's open and trade-reliant economy. For now, the bank has chosen stability over preemptive action, relying on real-time data to guide its next move.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

George Anderson

Over 630 days of war later and much of Hamas' top command has been wiped out, and large swathes of the Gaza Strip obliterated. It's been no secret that the Netanyahu government is pursuing the complete annihilation of Hamas, ensuring that it can never again return to rule, but the reality is that the Israeli army is still taking on mass casualties.

This shows that the Hamas insurgency, using the Strip's hundreds of miles of tunnels, is still fierce and ongoing. "Five Israeli soldiers were killed in combat in the Gaza Strip, the Israeli army admitted on Tuesday, in one of the deadliest days for Israeli forces in the devastated Palestinian territory this year," regional media reports.

The five soldiers "fell during combat in the northern Gaza Strip," the IDF announced. In total 14 others were wounded. Included were two that were severely wounded and "evacuated to a hospital to receive medical treatment."

They came under attack near Beit Hanoun in the north of Gaza,when improvised explosive devices were detonated, after which Israeli soldiers who sought to rescue the wounded came under fire again. Thus it's clear that either Hamas or Islamic Jihad militants set a trap and ambush for the soldiers.

The IDF and Israeli media have described that the infantry troops were operating on foot when the blast happened. One detail which highlights the ongoing extreme difficulty of uprooting the Palestinian insurgency is that the area where the attack occurred was subject of Israeli aerial raids just prior:

The military said the area where the attack took place was targeted from the air ahead of the troops’ operations.

The Netzah Yehuda soldiers were operating under the Gaza Division’s Northern Brigade as part of a fresh offensive with the 646th Reserve Paratroopers Brigade in Beit Hanoun, which began on Saturday, aimed at clearing the area of terror operatives who remain holed up there.

Israeli opposition leader Yair Lapid wrote on X in the wake of the large-scale casualties, "For the sake of the fighters, for the sake of their families, for the sake of the hostages, for the sake of the State of Israel: this war must be ended."

Israeli society has remained fiercely divided over Netanyahu policy, with hostage victims' family members outraged that efforts to negotiate a deal to release the remaining captives have completely stalled.

Meanwhile, there is some activity on this front, with Qatar’s foreign ministry on Tuesday saying that renewed indirect negotiations will "need time". The White House has been supportive of peace efforts, but has sided with Israeli actions in Gaza time and again in its public rhetoric.

"I don’t think that I can give any timeline at the moment, but I can say right now that we will need time for this," spokesman Majed Al-Ansari said as Doha-hosted discussion entered a third day.

"What is happening right now is that both delegations are in Doha. We are speaking with them separately on a framework for the talks. So talks have not begun, as of yet, but we are talking to both sides over that framework," he tells a Doha news conference.

Source: Zero Hedge

Risk Warnings and Disclaimers

Add to Favorites

Michael Ross

Gold held a decline after President Donald Trump said the new August deadline for the start of so-called “reciprocal” tariffs won’t be delayed, with nations expected to use the extended window to continue negotiating with the US.

Bullion traded near $3,300 an ounce, after a 1% loss in the previous session. Trump’s move to postpone the imposition of all “Liberation Day” duties — which were first announced in April and then delayed to July 9 — to next month is partly an effort to clinch more agreements from nations still willing to deal with the US, denting haven demand for the precious metal.

While the delay has eased some concerns about the potential negative impact that Trump’s tariff agenda could have on the global economy, the president also indicated he could announce substantial new rates on imports of copper and pharmaceuticals. If those materialize, that could see renewed demand for havens.

Gold was also impacted on Tuesday as US Treasuries fell. Yields have been rising as investors pare bets on Federal Reserve interest-rate cuts by year-end, following a report last week that showed a surprisingly resilient US labor market. Higher borrowing costs tend to pose a headwind for non-yielding bullion.

The precious metal has rallied by more than a quarter this year, setting a record in April, as Trump’s efforts to overhaul trade policies stoked uncertainty, driving investors to seek safety in gold. The advance has been supported by central-bank accumulation, with China announcing an eighth straight month of purchases earlier this week.

Spot gold was little changed at $3,300.23 an ounce as of 7:40 a.m. in Singapore. The Bloomberg Dollar Spot Index was little changed. Silver, palladium and platinum edged lower.

Source: Bloomberg Europe

Risk Warnings and Disclaimers

Add to Favorites

Alice Winters

U.S. President Donald Trump on Tuesday met for a second time in two days with Israeli Prime Minister Benjamin Netanyahu to discuss Gaza as Trump's Middle East envoy said Israel and Hamas were closing their differences on a ceasefire deal.

The Israeli leader departed the White House on Tuesday evening after just over an hour's meeting with Trump in the Oval Office, with no press access. The two men also met for several hours during a dinner at the White House on Monday during Netanyahu's third U.S. visit since the president began his second term on January 20.

Netanyahu met with Vice President JD Vance and then visited the U.S. Capitol on Tuesday, and is due back in Congress on Wednesday to meet with U.S. Senate leaders.

He told reporters after a meeting with the Republican House of Representatives Speaker Mike Johnson that while he did not think Israel's campaign in the Palestinian enclave was done, negotiators are "certainly working" on a ceasefire.

"We have still to finish the job in Gaza, release all our hostages, eliminate and destroy Hamas' military and government capabilities," Netanyahu said.

Shortly after Netanyahu spoke, Trump's special envoy to the Middle East, Steve Witkoff, said the issues keeping Israel and Hamas from agreeing had dropped to one from four and he hoped to reach a temporary ceasefire agreement this week.

"We are hopeful that by the end of this week, we'll have an agreement that will bring us into a 60-day ceasefire. Ten live hostages will be released. Nine deceased will be released," Witkoff told reporters at a meeting of Trump's Cabinet.

A delegation from Qatar, which has been hosting indirect talks between Israeli negotiators and the Hamas Palestinian militant group, met with senior White House officials for several hours before Netanyahu's arrival on Tuesday, Axios reported, citing a source familiar with the details.

The White House had no immediate comment on the report.

The Gaza war erupted when Hamas attacked southern Israel in October 2023, killing around 1,200 people and taking 251 hostages, according to Israeli figures. Some 50 hostages remain in Gaza, with 20 believed to be alive.

Israel's retaliatory war in Gaza has killed over 57,000 Palestinians, according to the enclave's health ministry. Most of Gaza's population has been displaced by the war and nearly half a million people are facing famine within months, according to United Nations estimates.

Trump had strongly supported Netanyahu, even wading into domestic Israeli politics by criticizing prosecutors over a corruption trial against the Israeli leader on bribery, fraud and breach-of-trust charges that Netanyahu denies.

In his remarks to reporters at the U.S. Congress, Netanyahu praised Trump, saying there has never been closer coordination between the U.S. and Israel in his country's history.

Source: Reuters

Risk Warnings and Disclaimers

Add to Favorites

James Riley

A gauge of U.S. used vehicle prices sold at wholesale auctions that proved predictive ahead of the inflation surge following the COVID pandemic is climbing again, last month notching its largest annual increase in nearly three years.

The rise comes amid ongoing vehicle price and sales volatility connected to auto tariffs imposed by President Donald Trump.

The Manheim Used Vehicle Value Index rose 1.6% in June from May on a seasonally adjusted basis and surged 6.3% from a year earlier, the largest year-over-year increase since August 2022, according to data released on Tuesday. At 208.5, the index has been trending upward for a year and is now at its highest since October 2023.

“Wholesale appreciation trends have been more volatile over Q2 as tariffs really impacted new sales and supply, which impacted the used marketplace as well,” said Jeremy Robb, senior director of economic and industry insights at Cox Automotive, which provides the index.

Price pressures typically ease in the second half of the year, but Robb said retail vehicle sales remain "a bit hotter than prior years" and the supply of vehicles coming off lease into the used-car market has been trending downward, "two factors which should be fairly supportive of higher values as we move onward.”

Trump's 25% tariff on imported autos prompted a surge in new vehicle-buying during the early spring as consumers sought to front-run anticipated price increases from the levies. Sales fell off substantially in May and dropped again in June.

Overall inflation has so far defied the predictions of most economists, but many Federal Reserve officials remain convinced some sort of price surge will follow and are hesitant to cut interest rates until satisfied that risk has passed.

Manheim's index in recent years has caught the eye of private economists and some Fed officials who saw it as among the early indicators auguring for a more substantial, and long-lasting, bout of inflation as the economy emerged from the pandemic in 2021 and 2022.

The index began a sharp climb in late 2020 that persisted for more than a year. By mid-2022, overall U.S. inflation as measured by the Consumer Price Index had topped 9% and was the highest since the 1980s.

Fed Governor Christopher Waller in the fall of 2021 warned against "selectively ignoring data series - be it used car prices, food and energy prices or household surveys of inflation expectations. All of these series convey important information about the evolution of inflation, and one should exhibit caution in dismissing data as outliers."

At the time, Waller was building the case for interest rate hikes to combat still-building inflation that some of his colleagues considered "transitory."

Now, though, Waller, who is viewed to be among those Trump is considering as a successor to Fed Chair Jerome Powell, appears more concerned the tariff increases will hurt demand rather than stoke another lasting bout of inflation. Waller said recently he was open to cutting rates as early as the Fed's meeting later in July.