Take Two: Bank of England cuts rates after split vote; Eurozone business activity expands
What do you need to know?
The Bank of England (BoE) cut its benchmark interest rate by 25 basis points (bp) to 4%, its lowest level since March 2023 and the fifth cut since last August. Failure to reach a majority decision led to an unprecedented second vote, with five policymakers ultimately voting in favour of the cut and four opting for no change. Initially, one had voted for a larger 50bp cut. The BoE said it would continue to take a “gradual and careful approach” to future policy decisions, and raised its inflation forecast to reflect higher food prices.
Around the world
Eurozone business activity continued to expand for the seventh consecutive month in July, driven by a rise in services, though the rate of growth remained sluggish. The composite Purchasing Managers’ Index (PMI), which includes both services and manufacturing data, increased to 50.9, a four-month high, from June’s 50.6. A reading above 50 indicates expansion. Elsewhere, US business activity saw a marked expansion in July - the composite PMI rose to 55.1 from 52.9 in June, largely thanks to the services sector. Activity continued to expand in China, albeit at a slower pace than the previous month as the composite PMI eased to 50.8 from 51.3.
Figure in focus: 3.3%
Global electricity demand is forecast to grow by 3.3% in 2025 and 3.7% in 2026, due to the increasing need to power factories, data centres, air conditioning and electric vehicles, according to the International Energy Agency (IEA). This represents one of the fastest sustained growth rates in over a decade, despite persistent economic headwinds, the IEA said. Renewable energy, natural gas and nuclear power are expected to meet the additional demand, with renewable energy forecast to overtake coal as the world’s largest source of electricity by 2026.
Words of wisdom:
Capital Expenditure: Capital expenditure (capex) refers to the money companies spend to purchase, maintain and upgrade their assets like equipment and property. Four US technology giants - Alphabet, Amazon, Meta and Microsoft – have together spent $155bn on capex so far this year, primarily on the development of artificial intelligence (AI), according to the Guardian newspaper. This figure exceeds the US government’s spending on education, training, employment and social services over the same period, it said. Growing demand for AI infrastructure including servers and data centres means tech firms’ capex is expected to grow significantly next year. Separately last week, President Donald Trump announced a 100% tariff on semiconductors and computer chips produced outside the US.
What’s coming up?
On Tuesday, the Reserve Bank of Australia meets to decide on interest rates, while the US issues inflation data. Elsewhere on Tuesday, the latest Eurozone ZEW Economic Sentiment Index is published, which reflects expectations of the bloc's six-month economic outlook. The Eurozone and UK each publish their second quarter GDP growth rate on Thursday, followed by Japan on Friday.
Disclaimer
This website is published by AXA Investment Managers Asia Limited (“AXA IM HK”), an entity licensed by the Securities and Futures Commission of Hong Kong (“SFC”), for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy, sell or enter into any transactions in respect of any investments, products or services, and should not be considered as solicitation or investment, legal, tax or any other advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities under any applicable law or regulation. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation, investment knowledge or particular needs of any particular person and may be subject to change at any time without notice. Offering may be made only on the basis of the information disclosed in the relevant offering documents. Please consult independent financial or other professional advisers if you are unsure about any information contained herein.
Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee such opinions, estimates and forecasts made will come to pass. Actual results of operations and achievements may differ materially. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Information herein may be obtained from sources believed to be reliable. AXA IM HK has reasonable belief that such information is accurate, complete and up-to-date. To the maximum extent permitted by law, AXA IM HK, its affiliates, directors, officers or employees take no responsibility for the data provided by third party, including the accuracy of such data. This material does not contain sufficient information to support an investment decision. References to companies (if any) are for illustrative purposes only and should not be viewed as investment recommendations or solicitations.
All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and that past performance is no guarantee of future returns, investors may not get back the amount originally invested. Investors should not make any investment decision based on this material alone.
Some of the services listed on this Website may not be available for offer to retail investors.
This Website has not been reviewed by the SFC. © 2025 AXA Investment Managers. All rights reserved.