Company: HBCYF
Filing Date: 2025-10-28
Form Type: 6-K
Source: 0001089113-25-000056
Chunk: 44

Company: HSBC HOLDINGS PLC
Filing Date: 2025-10-28
Form: 6-K
Chunk 44
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 is expected to stay above central bank target rates, reflecting higher tariffs in the US and the effects of services and food price inflation in the UK. In Hong Kong and mainland China, inflation is expected to remain subdued due to continued weakness in domestic demand and strong manufacturing growth in mainland China. Central banks are forecast to gradually cut policy interest rates, but they are expected to remain at a higher level than in recent years over the long term. – The consensus Upside scenario: This scenario incorporates a partial rollback of tariff measures, deregulation and a de-escalation of geopolitical tensions as the Russia-Ukraine war moves towards a conclusion and conflict resolution in the Middle East is accelerated. An improvement in the US-China relationship is also assumed. In the scenario, growth accelerates, unemployment is lower and asset prices rise above the Central scenario. Inflation accelerates modestly, driven by increased investment and higher consumption spending. – The consensus Downside scenario: This scenario assumes that the effects of tariffs on the global economy are worse than expected, leading to weaker economic activity compared with the Central scenario. In the scenario, GDP declines and unemployment rises, while asset prices and commodity prices fall. The scenario feature s an increase in tariffs over and above those assumed in the Central scenario, as the US administration raises tariffs on a number of key sectors. Geopolitical tensions are assumed to rise, as the Russia-Ukraine war intensifies and the conflict in the Middle East re-escalates. In most markets, inflation declines relative to the Central scenario, as tariffs are assumed to drive a drop in export demand from the US. In the US and Mexico, inflation is assumed to increase as higher tariffs across a broad range of imported goods pass through to consumer prices. The scenario is consistent with the US tariff rate, measured as an effective trade-weighted average, rising to 23% at the end of 2025, and remaining at that level in 2026. – The Downside 2 scenario: This scenario reflects management’s view of the tail end of the economic distribution. It incorporates the simultaneous crystallisation of a number of risks that leads to a deep global recession. The subsequent drop in demand leads to a steep fall in commodity prices, and a rapid increase in unemployment. The narrative features an escalation in tariff actions globally and further intensification of geopolitical crises. The scenario is consistent with the US tariff rate, measured as an effective trade-weighted average, rising to 33% at the end of 2025, and remaining at that level in 2026