Global financial markets wade into today, July 14, 2025, nervously awaiting a report on key US inflation data and struggling to understand the expanding ramifications of intensifying US tariff actions.
Putting this building macroeconomic backdrop on a cautious stance broadly, across equities, bonds and currencies, the same is a concerning trend of falling household financial savings in India, as revealed by another report alongside.
U.S. Inflation Data in Focus and Market Response
US CPI for the month of June 2025 is reportedly out July 15. The official CPI report is due out for June 2025 tomorrow, but early signs and positioning are making news today. The May 2025 CPI press release – released on June 11 – indicated headline inflation of 2.4% year over year and core CPI — excluding food and energy — of 2.8%.
On the horse-race front, analysts are eagerly awaiting the June numbers, which some predictions suggest may nudge up a bit. Traders are more attuned than usual to surprises in inflation readings because it will shape the outlook for the Federal Reserve’s monetary policy.
Inflation ticking higher than expected would compound worries about a Fed that will prioritise keeping rates higher for longer, keeping a lid on equities and boosting the dollar. On the flipside, a softer inflation print would give some respite and hopes of an earlier interest rate cut towards the later part of the year.
The popping of the precious metals with gold prices oscillating is a paying reflection of the volatility that already exists.
The collateral damage of U.S. tariffs
Adding to the inflation picture is the Trump administration’s increasingly protectionist US tariff policy. Added to that, the past few days have brought a level of trade antagonism not seen in some time: new tariff warning letters dispatched to more than 20 countries, including major economic partners such as Japan, South Korea, Mexico and the European Union.
Tariffs between 20% and 50% are scheduled to be imposed on August 1, 2025, if certain bilateral trade agreements are not in place. Most analysts also agree that the tariffs will instead be a “stagflationary shock” to the US economy, which means that the US consumer will get hit most as they pay more for imported goods.
In its July 9, 2025 report, the Swiss Re Institute predicted that US tariffs would suppress global GDP growth to 2.3 per cent in 2025 from 2.8 per cent in 2024. Policy uncertainty alone in Europe is likely to keep economic activity sluggish.
The tariffs also threaten to dislocate global supply chains, increase long-term inflation and undermine confidence in the US as a “safe haven” for global capital. The prospects of counter-tariffs by affected countries further compound the instability, making matters more difficult for global trade and investment Strategies.
India’s Declining Financial Savings
India’s own domestic economic battle is playing out against this complicated global backdrop. India’s household financial savings dropped for the third consecutive year to 18.1 per cent of GDP in FY24, CareEdge Ratings said in a report released on June 15, 2025.
This is down from 32.2% during FY15 and is in part the result of an increase in household financial liabilities that have almost doubled during the past 10 years, reaching 6.2% of GDP as households continue to use credit to meet their consumption needs.”
Though the Reserve Bank of India maintains a high interest rate (8.05% for July–December 2025) on Floating Rate Savings Bonds and the Employees’ Provident Fund Organisation (EPFO) has already credited an 8.25% interest for FY25, the overall investment trend in household savings is a worry. Such a decrease in remittances could affect the availability of internal capital for investment and even the long-term stability of the economy.
The immediate consequences of US economic policies and the continued threat posed by inflation, trade protectionism and other global challenges, as they play out in international markets, are being felt at home in economies like India, and absorption of these changes is becoming increasingly complex.
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