European stock markets saw gains on Tuesday, August 13, 2025, buoyed by renewed hopes that the US Federal Reserve might cut interest rates in its September meeting.
Factors Contributing to the Optimism:
- Easing US Inflation:Â The July 2025 US Consumer Price Index (CPI) report, released on August 12, 2025, indicated that while headline inflation remained steady at 2.7%, core inflation, excluding food and energy, rose to 3.1%. This mixed picture, with falling energy prices but rising core goods prices potentially due to tariffs, has fueled speculation that the Fed might consider a rate cut to support economic growth.
- Persistent Labor Market Concerns:Â Underlying concerns about the US labor market’s strength, particularly after recent revisions to employment data, have also contributed to expectations of a potential Fed rate cut.
- Impact of Trump-Era Tariffs:Â The ongoing impact of tariffs implemented during the Trump administration on consumer prices and economic activity is a key factor influencing market sentiment and Fed policy considerations.
- Global Economic Uncertainty:Â Broader geopolitical tensions and global economic uncertainty, including ongoing trade disputes, are also playing a role in shaping expectations around central bank policies.Â
Market Performance:
- STOXX 600:Â The pan-European STOXX 600 index edged up 0.4%.
- Major European Indices:Â Most regional bourses, including the DAX, FTSE 100, and CAC 40, also traded in positive territory.Â
Note:Â While some sources suggest a rise in US inflation to 2.8% in July 2025 (e.g.,
 The Economic Times), official data from the Bureau of Labor Statistics (BLS) and reported by
 Trading Economics indicates that the US inflation rate remained unchanged at 2.7% in July 2025.Â
