Global Economy Briefing: October 29, 2025

A policy-pivotal Wednesday featured rate adjustments from key central banks, reinforcing a gradual easing trajectory amid mixed demand signals.

The Federal Reserve and Bank of Canada implemented expected 25-basis-point cuts, Hong Kong followed suit, while the Bank of Japan maintained its stance.

U.S. pending home sales held flat against expectations of growth, mortgage applications surged on lower rates, Spain’s GDP decelerated slightly, UK lending metrics exceeded forecasts, and crude stocks posted a substantial draw exceeding consensus.

The day’s through-line: monetary policy is tilting accommodative in advanced economies, supporting housing activity without overheating, while commodity tightness adds a mild inflationary undercurrent. Near-term risks center on the sustainability of these cuts amid uneven regional growth.

United States

The FOMC lowered its target range by 25 basis points to 4.00%–4.25% (from 4.25%–4.50%), aligning with consensus and signaling a measured approach to balancing inflation and employment goals; Chair Powell’s press conference emphasized data dependence without forward guidance on pace.

Pending home sales were unchanged month-on-month in September (0.0% vs. +1.6% consensus; +4.2% prior), with the index steady at 74.8.

MBA data showed a robust rebound in mortgage applications (+7.1% week-on-week vs. -0.3% prior), driven by the purchase index (+4.5% to 164.3) and refinance index (+9.3% to 1,327.8), alongside a dip in the 30-year mortgage rate to 6.30% (from 6.37%).

EIA reported a larger-than-expected crude inventory draw of -6.858 million barrels (vs. -0.900 million consensus; -0.961 million prior), with gasoline stocks down -5.941 million (vs. -1.900 million expected) and distillates -3.362 million (vs. -1.800 million); refinery utilization fell -2.0 percentage points.

Story behind the story: The Fed’s cut bolsters the soft-landing framework, with housing metrics reflecting rate sensitivity—applications jumping as affordability improves—yet sales stagnation underscores persistent supply constraints. Oil’s surprise tightness could nudge energy costs higher, testing the disinflation narrative.

Europe and UK

Spain’s Q3 GDP expanded 0.6% quarter-on-quarter (in line with consensus; down from 0.8% prior) and 2.8% year-on-year (vs. 3.0% expected; 3.1% prior), indicating a modest slowdown in momentum. Retail sales eased to +4.2% year-on-year in September (from +4.7% prior).

Italy’s non-EU trade surplus widened to €2.74 billion in September (from €1.88 billion prior), supported by producer prices rising 0.2% month-on-month and 1.1% year-on-year (from -0.6% and +0.2% prior, respectively).

The 6-month BOT auction yielded 1.974% (down from 2.044% prior), and Germany’s 10-year Bund auction cleared at 2.620% (from 2.720% prior).

UK mortgage approvals rose to 65.94 thousand in September (vs. 64.00 thousand consensus; 64.96 thousand prior), with net lending to individuals at £7.000 billion (vs. £5.600 billion expected; £6.000 billion prior) and mortgage lending at £5.49 billion (from £4.28 billion).

M4 money supply grew 0.6% month-on-month (vs. 0.1% consensus; 0.4% prior), and M3 stood at £3,180.8 billion.

Switzerland’s ZEW expectations improved sharply to -7.7 in October (from -46.4 prior).

Story behind the story: Europe’s patchwork of softening Spanish output and resilient Italian trade, coupled with easing auction yields, points to fiscal breathing room amid fiscal tightening.

UK credit metrics signal household resilience, potentially stabilizing consumption as ECB rhetoric (via Lagarde) eyes further easing.

Asia

Japan’s household confidence edged up to 35.8 in October (vs. 35.5 consensus; 35.3 prior). The BOJ held its policy rate at 0.50%, releasing its outlook report and monetary statement; Governor Ueda’s speech reiterated gradual normalization amid steady inflation.

Australia’s Q3 export prices fell -0.9% quarter-on-quarter (from -4.5% prior), while import prices dipped -0.4% (vs. -0.3% consensus; -0.8% prior).

New Zealand’s ANZ business confidence surged to 58.1 (from 49.6 prior), with NBNZ own activity at 44.6% (from 43.4% prior).

Singapore’s Q3 unemployment held at 2.0%. Hong Kong cut its base rate to 4.25% (from 4.50%), tracking the Fed.

Foreign investment flows showed Japanese stocks attracting ¥1,344.2 billion (from ¥752.6 billion prior), with bond buying at -¥351.4 billion (from -¥664.4 billion).

Story behind the story: Asia’s policy divergence persists—BOJ’s hold contrasts HK’s alignment with U.S. easing—while upbeat NZ sentiment and softer Australian prices ease imported inflation pressures. Japan’s inflows highlight yen appeal, supporting a stable low-volatility backdrop.

Major Emerging Markets and Canada

The Bank of Canada reduced its overnight rate to 2.25% (from 2.50%; in line with consensus), accompanied by its monetary policy report and statement; the press conference elaborated on balanced risks.

Brazil’s September bank lending expanded 1.1% month-on-month (vs. 0.5% prior), and foreign exchange flows turned positive at $0.513 billion (from -$2.016 billion prior).

South Africa’s M3 money supply slowed to +6.07% year-on-year (from +6.18% prior), while private sector credit grew 6.03% (from 5.86% prior). Norway’s core retail sales contracted -0.5% month-on-month in September (from +0.1% prior).

Story behind the story: BoC’s cut extends Canada’s accommodative shift, mirroring EM trends like Brazil’s credit pickup, which counters FX outflow reversals.

South Africa’s monetary deceleration and Norway’s sales dip suggest orderly cooling, with labor markets (e.g., steady Singapore unemployment) anchoring stability.

Commodities & Flows

U.S. crude inventories declined -6.858 million barrels, far exceeding expectations and extending tightness; supporting draws were evident in imports (-1.025 million) and Cushing stocks (+1.334 million build, but overall balances firm). Refinery runs eased -0.511 million, with utilization down -2.0 points.

Story behind the story: The outsized oil draw reinforces supply constraints without immediate price spikes, as ample global capacity tempers upside. This dynamic keeps commodity-driven inflation subdued, shifting focus to policy-sensitive services and wages.

Risks and Framing

The base case for controlled disinflation firmed: synchronized rate cuts from the Fed and BoC, alongside housing resilience, provide tailwinds for growth without excess.

Localized risks include Spain’s GDP deceleration potentially broadening in the eurozone, and oil draws risking energy reflation if sustained.

Persistent auction softness and credit flows enable central banks to maintain flexibility; however, if pending sales weakness signals deeper U.S. housing fragility or EM flows reverse, the easing path could steepen.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

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