BREAKING NEWS Huge interest rate update for millions of Aussies with a mortgage
The Reserve Bank of Australia left the cash rate on hold at 3.85 per cent, confounding financial markets that had regarded a Tuesday afternoon rate cut as a 97 per cent chance.
For the first time ever, the RBA revealed the vote of its new monetary policy board with six in favour and three against.
Economists with Australia's Big Four banks were all forecasting relief and thought the RBA would move on Tuesday instead of waiting until August, following the release of June quarter inflation data.
Pricing for a rate cut had surged in late June after new Australian Bureau of Statistics data showed monthly headline inflation growing by just 2.1 per cent in May, putting on the low side of the RBA's two to three per cent target.
Australia's economy also grew by just 1.3 per cent in the year to March, a level well below the long-term average of three per cent.
The latest rate decision comes just days before Trump's 90-day pause on tariffs expires.
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NBC News
37 minutes ago
- NBC News
Trump's tariff deadline delay brings hope, confusion to trade partners, businesses
WASHINGTON, (Reuters) - U.S. President Donald Trump's latest tariff delay provided some hope to major trade partners Japan, South Korea and the European Union that deals to ease duties could still be reached, while bewildering some smaller exporters such as South Africa and leaving companies with no clarity on the path forward. Trump's form letters to 14 countries informing them of planned tariff rates of 25% to 40% provided what he called a final warning on his 'reciprocal' tariffs, while pushing back Wednesday's previous deadline to August 1, a date he said on Tuesday was final, declaring: 'No extensions will be granted.' The move reflects Trump's frustration with trade negotiations that are proving lengthier and more complicated than the '90 deals in 90 days' that he expected, trade experts and administration officials say. The president, who announced on Tuesday a 50% tariff on imported copper and said long-threatened levies on semiconductors and pharmaceuticals were coming soon, said he has long favored simple tariffs over tedious trade talks that often involve red lines for some countries and their own requests for U.S. concessions. Japanese Prime Minister Shigeru Ishiba focused on the positive, saying his government would press ahead with negotiations toward a deal that 'benefits both countries, while protecting Japan's national interest.' Facing a 25% general U.S. tariff, Japan wants relief for its export-dependent auto industry from Trump's separate 25% automotive tariffs. It also has resisted demands for increased purchases of American rice. Japan, once viewed as an early favorite for a deal, faces an upper house election on July 20 and too many concessions could put Ishiba's ruling Liberal Democratic Party at risk. 'These countries are not folding. They're not giving him what he wants, so he's added another threat,' said William Reinsch, a former U.S. Commerce Department official who is a senior trade adviser at the Center for Strategic and International Studies. 'He's put a new number to it and extended the deadline.' South Korea, where President Lee Jae Myung has been in office less than a month, also pledged to intensify talks for 'a mutually beneficial result' while analysts warned he would not be 'a pushover' for Trump or put South Korea at a disadvantage to Japan. Stephen Miran, chairman of the White House's Council of Economic Advisers, told Fox News on Tuesday more deals were possible even before the end of this week, as long as countries made concessions deemed worthy by Trump. India, in particular, looked close to a deal, but prospects were less clear for smaller countries such as South Africa, Thailand and Malaysia, which face tariffs of 30%, 36% and 25%, respectively. South African President Cyril Ramaphosa pushed back on Trump's 30% tariff rate, calling it out of sync with an average 7.6% South African tariff rate. But he instructed his negotiators to 'urgently engage' with Trump's team on a framework first submitted by the South African side on May 20. The Trump administration's negotiating time may be eaten up with larger partners, such as the EU, which did not get a warning letter or a change to its prescribed 20% tariff rate, double the 10% baseline. Sources familiar with the EU talks have told Reuters a deal could involve carve-outs for aircraft and parts, medical equipment and alcoholic spirits. They say the EU also wants certain automakers to export to the U.S. at rates below the 25% auto tariff. Such a deal would be similar to a framework agreement with the United Kingdom that had carve-outs for autos, steel and aircraft engines. Final squeeze After announcing his global 'Liberation Day' tariffs of 11%-50% in early April, Trump quickly dialed them back to 10% for most countries amid bond market turmoil to buy time for negotiations to lower foreign tariffs and trade barriers. Ryan Majerus, another former U.S. Commerce official, said Trump's three-month pause had not produced the desired results, and now the president was seeking to maximize his negotiating leverage. 'They're going to pressure-test things and see how far they can go, particularly for countries where there hasn't been any movement in the talks,' said Majerus, who is a partner at Washington's King and Spalding law firm. Steadier markets and strong economic data give Trump some room to maneuver, but time is short and 'the more granular you get in negotiating these things, the tougher the sledding gets,' he added. The deadline extension provides no relief to companies that are trying to keep up with Trump's tariffs. Executives say the rapidly shifting tariff landscape has paralyzed decision-making as they try to adjust their supply chains and cost structures to avoid tariff-induced price hikes. 'No company can really prepare for this,' said Hubertus Breier, chief technology officer for Germany's Lapp Holdings, a family-owned maker of cables, wires and robotics for factories. 'We are already incurring losses simply because of the uncertainty of the daily changing situation.' Lapp has difficult choices — absorb additional costs or pass them on to customers. Assuming permanently higher prices and costs, however, could threaten its long-term existence, Breier added. DeMejico, a family business in Valencia, California with a plant in Mexico that builds traditional Spanish and Mexican-style furniture, is struggling to adapt to Trump's 50% tariffs on imported steel. Robert Luna, the company's president, said the firm is importing heavy steel latches, hinges and trim parts separately to simplify the tariff calculation process and installing them at its Los Angeles-area showroom. The tariffs and higher U.S. wage costs are already inflating prices, and DeMejico faces further cost increases on furniture if Trump hits Mexico with a reciprocal tariff, Luna said. 'It's hard to do anything about this as a small business owner, so I just try to be stoic and see what happens,' Luna said, adding: 'My biggest worry is just keeping the company alive.' Luna said he thought the Trump administration was 'setting up the foundation to train people to pay tariffs.'
Reuters
an hour ago
- Reuters
Mexico headline inflation seen easing in June with core rate climbing: Reuters poll
BUENOS AIRES/MEXICO CITY, July 8 (Reuters) - Mexican headline inflation likely eased in June after rising for four straight months, though core inflation is expected to have kept climbing, fueling bets the central bank will slow the pace of interest rate cuts, a Reuters poll showed on Tuesday. The median forecast from 17 analysts projected an annual headline inflation rate of 4.31% for June, down from 4.42% in May, though still above the official target of 3%, plus or minus one percentage point. In contrast, core inflation, often seen as a better gauge of price trends because it strips out highly volatile items, was estimated to have accelerated further to 4.22%, its highest level since April of last year. On a monthly basis, consumer prices were expected to have risen 0.27%, while core prices were forecast to increase by 0.38%, according to the survey. Official data will be released on Wednesday. At the end of June, the Bank of Mexico cut its benchmark rate by 50 basis points for a fourth consecutive time, continuing an easing cycle that began in 2024 after rates reached their highest level on record. However, in its latest statement, the central bank's board adjusted its forward guidance, dropping previous references to further 50 basis point cuts. Instead, it said it would continue to assess "additional cuts." Markets interpreted the change in tone as a signal that the central bank may slow the pace of monetary easing at its next meeting on August 7. A Citi survey published this week showed consensus among participants for a 25 basis point cut in August.
The Guardian
an hour ago
- The Guardian
Trump is bullying Canada over ‘digital taxes' and Canada caved
Donald Trump's announcement calling off trade talks with Canada over its digital tax – and that he would impose retaliatory tariffs – demonstrates, once again, not only the president's ignorance of economics and willful disregard of international norms and the rule of law, but also his willingness to use brute power to get whatever he and the oligarchs who support him want. He was wrong in labeling the tax as outrageous and 'a direct and blatant attack on our country'. It is actually an efficient tax, well designed to ensure that the technology companies – the profits of which benefit the tech oligarchs who have come to dominate US policy – pay their fair share of taxes. It is accordingly disappointing that Canada appears to have caved, even more so as the prime minister had stood up strongly against Trump's demand for Canada to become the 51st state. Regrettably, others are giving in – New Zealand and India have reportedly retreated. Trump's bullying tactics have been in evidence since he took office. In January he threatened to double taxes on Australian citizens and companies in the US if they went ahead with their planned digital levy. Why digital taxes? Because digital companies operate all over the globe, and generate revenue in countries where they do not have a physical presence, they avoid taxation by shifting revenue and profit around the world. Some of the most egregious examples include Google moving $17bn to Bermuda, Apple owing France 10 years of back taxes, and the Italian government's recent investigation of Meta over whether the firm owes €938m in VAT payments. Apple was so successful in avoiding taxes in Europe that it is estimated that it paid in some years a tax of just 0.005% on its European profits. Of course, when the most profitable companies in the world don't pay their fair share of taxes, it just shifts the burden on to others. As more and more activity occurs online, and often from services provided from abroad, countries are losing revenue from sales, employment and profits taxes. Just because an activity is provided digitally doesn't mean it should not be taxed; indeed, economists argue that digital taxes are among the easiest to administer, precisely because there is a digital record. The idea of the digital service tax is to help countries recoup revenue by taxing any kind of digital service provided from anywhere in the world: online sales, digital advertising, data usage, e-commerce or streaming services. They might include consumption taxes on internet purchases. Indeed, more than 18 countries have such taxes and some 20 others have proposed them. When it looked like the Organisation for Economic Co-operation and Development (OECD) would get a global agreement to raise corporate taxes, the agreement included a prohibition on digital taxes. Indeed, one of the reasons that the US was even willing to engage in these discussions on global taxation was to circumscribe others' ability to impose such taxes. While that agreement was under discussion, the US government, influenced by its tech giants, strongly opposed these digital taxes and then US treasury secretary Janet Yellen spent a good deal of time calling up her counterparts and telling them not to impose them. But on 20 January, Trump issued an executive order saying that the agreement that had been negotiated over years and years 'had no force or effect' in the US. As a result, more countries are now trying to decide whether to keep or adopt digital services taxes. Imposing them will incur the wrath of the US government and tech giants, but countries are well within their rights to do so. Indeed, there was a moratorium on levying digital taxes while there were some prospects of the OECD agreement going into effect; but with Trump, that prospect has all but disappeared, and that moratorium has come to end. Any country concerned with designing efficient, fair and easy-to-administer digital services duties should consider such taxes – indeed, they have the support not only of economists but of global civil society, including the Independent Commission on Reform of International Corporate Taxation (which I co-chair). Sign up to This Week in Trumpland A deep dive into the policies, controversies and oddities surrounding the Trump administration after newsletter promotion Long-established principles of international taxation hold that so long as a tax does not discriminate across countries – or corporations that are headquartered in different countries – which taxes a country imposes is a matter of national sovereignty. A country may be foolish, levying taxes that are not good for its economy, but so be it: that is a matter for the country to decide. In this case, the tax is actually good for the economy. What Trump has been doing has violated international norms in several ways: using the threat of tariffs or taxes against corporations headquartered in a country whose policy he dislikes, and walking away from what were supposed to be binding trade agreements, without even a pretense of using the mechanisms for dispute resolution embodied in those agreements. The question now: will countries cave in to these threats or can they stick together and collect the billions they are rightly owed? Make no mistake: what is at stake is more than money that will be collected. It is a matter of the rule of law, which Trump has trampled on so fiercely, both within the US and globally. The rule of law is essential not just for economic performance, but for social justice and democracy. And Canada's capitulation to Trump's unilateral move makes a mockery of the whole process by which international agreements are negotiated. Some were skeptical that the so-called 'inclusive framework' was but a facade: others may have been at the table, but their voices were not heard. What has now happened verifies this: whatever the US wants, it gets. Canada should have stood up for its principles and national sovereignty, even in the face of such transparent bullying. The alternative now emerging is the law of the jungle, brute power and Canada becoming, de facto, the 51st US state. Joseph E Stiglitz is a Nobel laureate in economics, university professor at Columbia University and chief economist of the Roosevelt Institute Anya Schiffrin, senior lecturer at Columbia University's School of International and Public Affairs, and her student Philip L Crane contributed to this piece
