Latest news with #tradeuncertainty
Globe and Mail
6 days ago
- Business
- Globe and Mail
Like the Fed, European Central Bank holds off on rate cuts amid tariff upheaval
FRANKFURT, Germany (AP) — The European Central Bank left interest rates unchanged Thursday, hitting pause on rate cuts amid uncertainty over US President Donald Trump's tariff onslaught and high-stakes trade talks marked by threats of drastically higher import taxes on European goods. Bank President Christine Lagarde said the current economic environment and the potential impact of higher tariffs was 'exceptionally uncertain." Higher tariffs could slow investment, growth and inflation - or they could be inflationary by disrupting existing supply chains for parts and raw materials. 'The sooner this trade uncertainty is resolved ... the less uncertainty we will have to deal with," she said. 'And that would be welcome by any economic actors, including trade tensions are resolved in short order, it will clear some of the uncertainty that we have weighing on the decision-making of consumers, of investors, of, untold enterprises." 'You could argue that we are on hold, we are in this wait and watch situation.' The central bank for the 20 countries that use the euro is facing the same dilemma that has led the U.S. Federal Reserve to hold off on cutting rates further: it's hard to tell how high the tariffs will end up after fraught negotiations, and what the ultimate impact will be on the economy. Fed Chair Jerome Powell has been harshly criticized by the Trump for delaying rate cuts. For his part, Powell has said the Fed wants to see the impact of the duties on prices and the economy before making any rate changes. The ECB has already cut rates eight times since June of last year. The monetary authority for the 20 countries that use the euro currency has been lowering rates to support growth after raising them in 2022-2023 to snuff out inflation caused by Russia's invasion of Ukraine and the rebound after the pandemic. With the bench mark rate now at 2%, down from a record high of 4% Analysts say a rate cut in September is a possibility but not a certainty. The reason: ECB's policymakers simply don't know the outcome of talks between the EU's executive commission and the Trump administration. Trump first set a 20% tariff for EU goods, then threatened 50% after expressing displeasure at the pace of talks, then sent the EU a letter informing officials of a potential 30% tariff. EU officials earlier held out hope of winning at least the 10% baseline that applies to almost all trade partners, and analysts think that the actual rate may be lower than Trump's tariff threats. The talks are up against an Aug. 1 deadline, but earlier deadlines have slipped as the sides kept talking. Higher tariffs, or import taxes, on European goods would mean sellers would have to either increase prices for U.S. consumers - risking loss of market share - or swallow the added cost in terms of lower profits. In either case, higher tariffs would hurt export earnings for European firms and slow the economy, which would strengthen the case for another rate cut in September. The ECB's rate cuts have helped support economic activity by lowering the cost of credit for consumers and businesses to purchase goods. Higher rates have the opposite effect and are used to cool of inflation by reducing demand for goods. Growth in the eurozone was relatively strong at 0.6% in the first quarter - though that was partly due to rushed shipments of goods trying to beat the tariffs. Inflation has fallen from double digits in late 2022 to 2% in June, in line with the ECB's target. A stronger euro, which lowers the price of imports, and softer global prices for oil have helped keep inflation moderate.
Yahoo
6 days ago
- Business
- Yahoo
ECB holds interest rates amid trade uncertainty
The European Central Bank (ECB) kept interest rates steady at on Thursday, after seven consecutive cuts, amid trade uncertainty. The main policy remained at 2%, while its deposit rate was on hold at 2.15%. The Frankfurt-based central bank said: "Domestic price pressures have continued to ease, with wages growing more slowly. Partly reflecting the governing council's past interest rate cuts, the economy has so far proven resilient overall in a challenging global environment. At the same time, the environment remains exceptionally uncertain, especially because of trade disputes." It comes as US president Donald Trump's threat to impose a 30% duty on EU goods exported to the US has pushed the governing council to contemplate lower outcomes for growth and inflation. The ECB has already halved its policy rate from a record high of 4% in the space of a year after taming a surge in prices that followed the end of the COVID-19 pandemic and Russia's invasion of Ukraine. The hold puts a pause on seven straight cuts as it awaits confirmation on Europe's trade relations with the US. Read more: FTSE 100 LIVE: Stocks rise amid hopes the EU and US will reach trade deal On Wednesday, two diplomats said that the EU and the US were heading towards a deal that would result in a broad tariff of 15%. The rate would mirror the framework agreement the US struck with Japan, officials said in a brief to EU envoys on the talks. Under the outlines of the potential deal, the 15% rate could apply to sectors including cars and pharmaceuticals and would not be added to long-standing US duties, which average just under 5%, Reuters reported. It is believed there could also be concessions for sectors like aircraft and lumber as well as some medicines and agricultural products, which would not face tariffs. "If the two sides indeed conclude such a deal, it would support our call that the euro zone economy can regain momentum from the fourth quarter onwards and that the ECB will not need to cut rates further," Berenberg economist Holger Schmieding said. Last week, statistics body Eurostat revealed that eurozone inflation was sitting at the ECB's target, with the consumer price index (CPI) rising by 2.0% annually last month. Read more: UK inflation unexpectedly rises in June on higher fuel prices It was in line with expectations, but did marginally accelerate from the 1.9% recorded in May, which was an eight-month low. Meanwhile core inflation, which strips out more volatile items like food and fuel, climbed 2.3% in the 12 months to June, matching the level seen the previous month — highlighting persistent underlying price pressures, particularly in services. The lowest annual rates were registered in Cyprus (0.5%), France (0.9%) and Ireland (1.6%). The highest annual rates were recorded in Romania (5.8%), Estonia (5.2%), Hungary and Slovakia (both 4.6%). The euro edged lower against the dollar after the in to access your portfolio
Yahoo
6 days ago
- Business
- Yahoo
Packaging Corp forecasts profit below estimates on export, freight pressures
(Reuters) -Packaging Corp of America forecast third-quarter profit below Wall Street estimates on Wednesday, hurt by rising freight costs and weak export containerboard sales amid global trade uncertainty. The Lake Forest, Illinois-based company specializes in delivering paper and packaging products catering to a range of sectors, including the food and beverage industry, paper manufacturing, and retail commerce. While demand for packaging goods is recovering from a post-pandemic slowdown, sticky inflation and cautious consumer sentiment have pressured sales, especially while its customers navigate trade uncertainties due to tariffs. CEO Mark Kowlzan said pricing in both packaging and paper will remain flat in the third quarter, while freight costs will rise due to higher rail rates. The company expects third-quarter profit of $2.80 per share, compared with analysts' average estimate of $2.92 per share, according to LSEG data. Packaging Corp's net sales rose slightly to $2.17 billion in the quarter ended June 30, from $2.07 billion a year earlier. Analysts on average estimated $2.19 billion, according to data compiled by LSEG. Its adjusted profit for the second quarter came in at $2.48 per share, compared with estimates of $2.44. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-07-2025
- Business
- Yahoo
CN Rail lowers earnings expectations, cuts outlook amid trade volatility
MONTREAL — Canadian National Railway Co. reported its net income inched up to $1.17 billion during its second quarter compared with last year, as it said the trade uncertainty is making it difficult for it to provide investors with an outlook. The Montreal-based company says revenue fell about one per cent, to $4.27 billion compared with $4.33 billion a year earlier. Diluted earnings per share for the quarter came in at $1.87, up from $1.75 a year earlier. CN lowered its 2025 forecast for adjusted diluted earnings per share growth, saying it now expects growth in the mid to high single-digit range. A previous estimate from CN expected adjusted diluted earnings per share to increase between 10 and 15 per cent for 2025. CN says it is removing its 2024-26 financial outlook given continued uncertainty surrounding trade and tariff uncertainty. This report by The Canadian Press was first published July 22, 2025. Companies in this story: (TSX:CNR) The Canadian Press
Yahoo
22-07-2025
- Business
- Yahoo
European second-quarter corporate profits expected to fall 0.3%
By Javi West Larrañaga and Marleen Kaesebier (Reuters) -The outlook for European corporate health has slightly improved, the latest earnings forecasts showed on Tuesday, despite continued uncertainty over global trade and the European Union preparing for counter-measures against any major U.S. tariffs. European companies are expected to report a drop of 0.3% in second-quarter earnings, on average, according to LSEG I/B/E/S data. That is slightly above the 0.7% fall analysts expected a week ago. Forecasts for Europe-wide STOXX 600 company earnings have steadily worsened since U.S. President Donald Trump announced plans for "reciprocal" tariffs in February. Analysts expected second-quarter earnings to increase 9.1% year-on-year right before the announcement, according to the data. The consensus forecast for second-quarter revenue, on the other hand, has continued to weaken, the LSEG report showed, with analysts now expecting a 3.1% fall versus a 3.0% drop last week. That would be the worst quarterly performance in more than a year. A year ago, STOXX 600 companies on average delivered a 3.0% increase in second-quarter earnings and a 0.8% drop in revenues. This earnings season will highlight how Trump's tariff threats are affecting European companies, as many of them scramble to minimise risks and prepare strategies to counter uncertainty. Italian-listed Stellantis said on Monday tariffs had already cost the auto group 300 million euros ($351 million) and pharma firm AstraZeneca announced plans to spend $50 billion expanding in the U.S. by 2030. Among sectors, the earnings of STOXX 600 technology firms are expected to increase 26.5% in the second quarter, while those of consumer cyclicals - auto, retail and entertainment companies - are forecast to shrink 23.6%, the LSEG data showed. ($1 = 0.8545 euros) Sign in to access your portfolio
