Australian Bond Exchange

ABE Weekly: US Federal Reserve leaves official interest rates unchanged while China eases monetary policy

Australian Bond Exchange Weekly Update

9th May 2025

Key Points

  • Final Days to Secure 7.80% p.a. – Booking Closing Soon
  • Australia: The Reserve Bank of Australia (RBA) has kept the cash rate steady at 4.10% per annum. Inflation for the March quarter stands at 2.4%, with the trimmed mean at 2.9%.
  • United States: The Federal Reserve maintained its cash rate within the range of 4.25% – 4.50% per annum. March’s inflation data declined to 2.4%. Core inflation (excluding food and energy) rose by 2.8%.
  • United Kingdom: The Bank of England (BoE) has cut its Bank Rate by 0.25% to 4.25%. March’s inflation eased to 2.6%, down from 2.8% in February.
  • Eurozone: The European Central Bank (ECB) decreased interest rates by 0.25% to 2.25% per annum. Inflation in March moderated to 2.2%, compared to 2.3% in the previous month.

Market Insights

  • The US Federal Reserve leaves official interest rates unchanged.
  • China boosts its economy by easing monetary policy.
  • The Bank of England decreases official cash rates

US Federal Reserve leaves official interest rates unchanged

As expected, the Federal Reserve left its benchmark interest rate unchanged at 5.25% – 5.50%, maintaining a cautious approach amid moderating inflation. Chair Jerome Powell reiterated the Fed’s stance of patience, saying the current policy position is “appropriate to wait and see” how economic conditions evolve.

While recent data has shown signs of softening in some sectors, Powell emphasised continued resilience in consumer spending and labor markets. The Fed remains attentive to inflation risks and is unlikely to signal rate cuts until there’s greater confidence that inflation is moving sustainably toward the 2% target.

China boosts its economy by easing monetary policy

In a coordinated effort to stabilise the economy and financial markets, Chinese regulators including the People’s Bank of China (PBoC), National Financial Regulatory Administration, and China Securities Regulatory Commission unveiled a fresh round of stimulus measures.
Key actions included:

  • A 0.5 percentage point cut to the Reserve Requirement Ratio (RRR), releasing an estimated ¥1 trillion (US$138 billion) in liquidity.
  • A 0.1 percentage point reduction in the policy interest rate, and a 0.25 percentage point cut to relending facility rates.
  • A 0.1 percentage point reduction in the policy interest rate, and a 0.25 percentage point cut to relending facility rates.

These efforts aim to stabilise confidence amid sluggish domestic demand ahead of key trade negotiations with the US.

The Bank of England decreases cash rates by 0.25% to 4.25%

The Bank of England decreased its main interest rate by 0.25 to 4.25%. This marks the fourth rate cut since August 2023 and the second in 2025, bringing the rate to its lowest level in over two years. Furthermore, U.S. President Donald Trump and British Prime Minister Keir Starmer announced a limited bilateral trade deal that leaves in place Trump’s 10% tariffs on British exports, modestly expands agricultural access for both countries and lowers prohibitive U.S. duties on British car exports.

Introducing a New Fixed Income Investment – Backed by Commodity Finance 

China’s manufacturing sector saw its steepest slowdown in over a year, as measured by the official Purchasing Managers’ Index (PMI), which fell below the 50-mark in April — signalling contraction.

This decline follows a brief export surge in March, likely driven by manufacturers expediting shipments ahead of newly imposed U.S. tariffs. The introduction of these trade measures is now weighing on production and sentiment.

Institutions including the IMF, Goldman Sachs, and UBS have revised down their growth forecasts for China, citing ongoing uncertainty and external trade pressures. Most projections now fall short of China’s official growth target for 2025.

ABE is s pleased to bring you access to a bond-linked investment opportunity delivering a fixed return of 7.80% p.a., linked to the CRAFT Secured Notes – a unique exposure to the Commodities Receivables and Finance Trust (CRAFT).

Investment Overview:

  • Coupon Rate: 7.80% p.a (Fixed)
  • Term: 31 March 2030 (the Issuer has the opportunity to extend the maturity date to 30 September 2030)
  • Coupon Frequency: Paid semi-annually
  • Minimum Investment: $AUD 10,000.00
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What is CRAFT?

The Commodities Receivables and Finance Trust (CRAFT) is a private capital vehicle designed to address the evolving needs of the resource sector. It helps resource enterprises manage their cash flow amidst the current market challenges.

CRAFT brings together seasoned executives from the commodity sector to offer a reliable, innovative platform for commodity finance. It focuses on Tier 1 and Tier 2 resource operators in top markets, providing them with essential financing solutions.

This investment opportunity offers an attractive return of 7.80% per annum return paid semi-annually over a 5-year term. 

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Why Consider CRAFT?

  • Diversification Benefits – A unique opportunity to diversify your portfolio by gaining access to commodity financing
  • Consistent, Competitive Returns
  • Asset-Backed Security
  • First-Loss Protection

Investing in this bond is subject to a range of risks including:

  • Interest rate movements
  • Credit risk of issuer
  • Market risk if you sell before maturity

Please refer to the IM for full details of the risks

Reference Overview:

  • CRAFT is a private capital vehicle designed to address the growing liquidity gap in the resource sector, providing financing solutions for resource operators.
  • Focuses on providing commodity finance to Tier 1 and Tier 2 resource operators in leading markets.
  • Led by seasoned executives with deep expertise in the commodity sector, ensuring reliable and innovative financing solutions while carefully managing associated risks.
  • Partners with approved commodity finance lenders and co-underwrites loans.
    Positioned as a strategic provider of private credit, responding to the increasing demand for non-bank financing in the resource sector.

Key Information

Investors should view the product info page before considering an investment with CRAFT Bond Issues Pty Ltd.

*Data accurate as at 09.05.2025

Disclaimer: This document has been prepared by ABE Distribution Pty. Ltd ACN 673 177 912 Corporate Authorised Representative 1307088  (“ABE”) and is of a general nature only. It was prepared without considering your financial needs, circumstances and objectives. Before investing in a fixed-interest product with ABE, you should consider whether it is appropriate for your circumstances and review the relevant terms and conditions. This document contains links to other third-party websites, some of which require a subscription to read. Such links are for your convenience only, and ABE does not recommend or endorse these third-party sites.. No representation or warranty is made as to the accuracy, completeness or reliability of any estimates, opinions, conclusions, or other information contained in the content. The content may contain certain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors, many of which are beyond our control. To the maximum extent permitted by law ABE disclaims all liability and responsibility for any direct or indirect loss or damage that you may suffer as a result of relying on anything in this content. Past performance is not an indication of future performance 

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