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Daily Economic Update
16.11.2025
US: Trump eases tariffs on food imports as Fed signals a more hawkish stance. President Trump rolled back tariffs on several food and agricultural commodities to help contain rising grocery bills. Though the move was an implicit acknowledgement of tariff-driven higher consumer prices, Trump continued to defend high import duties, saying there was "virtually no inflation," even as he accepted that they may raise prices in “some cases.” CPI inflation for food at home has steadily risen to 2.7% y/y in September 2025 after hitting its post-pandemic low of 0.9% in August 2024. An important matter going forward would be to see if the consumer prices of the respective goods would actually drop after the tariff removal or that these prices will remain sticky while companies’ margins across the supply chain will get a boost. Meanwhile, Trump renewed his pitch to use revenues from tariffs to pay a special $2,000 ‘dividend’ to low-income people sometime next year as well as to reduce the federal debt. On Thursday, the US administration inked trade frameworks with some Latin American countries including Argentina, Guatemala, El Salvador, and Ecuador, to import food and other goods at lower levies in exchange of better market access for US merchandise. Meanwhile, several Fed officials highlighted their growing hawkish bias before the next FOMC meeting in December, underscoring inflation concerns amid broadly resilient economic conditions. Kansas City Fed President Jeff Schmid, who dissented in favor of keeping interest rates on hold in October, mentioned that further rate cuts would not help improve job markets but “could have longer-lasting effects on inflation”. Boston Fed President Susan Collins (another FOMC voting member) earlier said “providing additional monetary support to economic activity runs the risk of slowing, or possibly even stalling, the return of inflation to target”. St. Louis Fed President Alberto Musalem (a voting member) supported “to proceed and tread with caution,” without the policy becoming “overly accommodative.” Minneapolis Fed President Neel Kashkari (an alternate voting member) highlighted that he didn’t support the October rate cut decision, while continuing to depend on data for his preference in December. Cleveland Fed President Beth Hammack (an alternate member) preferred keeping the policy “somewhat restrictive to continue putting pressure to bring inflation down.” San Francisco Fed President Mary Daly (non-voting) underscored her uncertainty, saying “it’s premature to say definitely no cut, or definitely a cut.” As Fed message turns increasingly hawkish, the futures market now signals less than 50% probability of a 25-bps interest rate cut at the FOMC December meeting versus over 90% at some point last month. Finally, National Economic Council Director Kevin Hassett stated that the October job report would not cover the household survey that provides the unemployment rate.
UK: GDP growth in Q3 disappoints, slowing more than forecast; Chancellor plans to ditch income tax in budget. UK GDP growth in Q3 came in at 0.1% q/q (1.3% y/y), slowing from 0.3% (1.4% y/y) in Q2. This is weaker than the consensus and the Bank of England’s (BoE) forecast (0.2% q/q). Growth in services slowed to 0.2% q/q from Q2’s 0.4% and production output continued to decline, by 0.5% following a drop of 0.8% in Q2, which points to a broad-based softness in the economy. The uncertainty surrounding the government’s Autumn budget has been weighing on economic activity in recent months, affecting growth while employment levels trend lower. As Chancellor Reeves is expected to unveil fresh fiscal consolidation measures on November 26, the overall UK economic landscape over the near term remains uninspiring. However, according to some media reports, Reeves looked set to cancel her plans for raising income tax rates for individuals and lifting certain other taxes in the upcoming budget as the government appears fearful of the political backlash that would accompany breaking a key Labour manifesto pledge, though the Treasury is reportedly saying that this is due to better-than-expected growth forecasts from the Office for Budget Responsibility (OBR) that leave the Chancellor with a shallower ‘fiscal hole’ than anticipated. Following these developments and as worries mount about the government’s fiscal and public debt situation, yields on UK gilts spiked (10Y, +14bps d/d to close at 4.57% on Friday) and the pound fell.
China: Economic activity indicators weakened in October as policymakers hold off on new stimulus. China’s industrial production and retail sales posted their weakest growth in over a year in October but were impacted by a weeklong holiday early in the month. Industrial production rose 4.9% y/y, the slowest pace since August 2024 and below September’s 6.5% increase, missing the 5.5% forecast. Meanwhile, retail sales grew 2.9% y/y in October, also the weakest since August last year, easing slightly from 3.0% in September but was a touch above expectations of 2.7%. On the housing front, new home prices fell 2.2% y/y in October, matching September’s drop but the monthly decrease picked up to 0.5% from 0.4% in September. Consecutive declines in home prices during what is typically a peak sales season underscore persistent weakness in the property sector and highlight the difficulty Beijing faces in stabilizing housing amid broader growth headwinds. Lastly, Chinese fixed asset investment contracted by 1.7% in 10M2025 (-0.5% in 9M2025) marking its weakest level since June 2020 and falling well below already subdued expectations. The decline was driven by a faster decrease in property investment, infrastructure and slower growth in manufacturing. Overall, the latest data reinforces the view that China’s economy is losing steam into year-end, with structural weaknesses in property and investment amplifying downside risks and increasing pressure for targeted policy easing.
Saudi Arabia: Inflation unchanged at 2.2% in October. Consumer price inflation remained steady at 2.2% y/y in October, unchanged from September. Housing inflation eased to a 3-year low of 4.5% (down from 5.2% in September), with rental inflation slowing for the eleventh consecutive month to 5.7%. The continued cooling in rental price growth reflects government measures to expand housing supply, and rental inflation is expected to gradually decline toward zero by end-2026 as the recently implemented rental freeze in Riyadh takes fuller effect. This moderation was offset by higher food and beverage inflation, which rose to 1.5% (the highest since April), and faster inflation in categories, such as financial services and miscellaneous goods and services. Core inflation (excluding food and energy) eased slightly to 2.5%, compared to 2.6% in September.
Egypt: More FDI continues to flow into the energy and renewable energy sectors. Egypt secured two significant investments this week across the traditional and renewable energy sectors, reinforcing the country’s position as a key destination for long-term energy-sector FDI. Italian energy major Eni has extended its Gulf of Suez and Nile Delta concession with the Egyptian General Petroleum Corporation until 2040. The agreement grants Eni the right to fully exploit remaining oil and gas potential in the area and conduct a new 3D seismic survey. The concession includes the historic Belayim field, which has been producing since 1954 and still supplies around 60 kb/d, underscoring its continued strategic relevance to Egypt’s energy mix. In parallel, Singapore-based Destiny Energy plans to build a $210 million green hydrogen and green ammonia complex in the Suez Canal Economic Zone (SCZone). The project aims to produce 53 tons of green hydrogen and 300 tons of green ammonia per day, powered by new wind and solar capacity that will be developed either by Destiny Energy or in partnership with another renewables’ provider. Together, these developments highlight Egypt’s dual-track energy strategy, maximizing value from existing hydrocarbons while accelerating investment in clean energy production to position the country as a future regional hub for green fuels.