G7 central banks to issue first responses to Trump tariff chaos this week

The first Group of Seven (G7) monetary policy will respond to President Donald Trump’s tariffs, which were pushed into global markets last week. The European Central Bank (ECB) and Bank of Canada (BOC) are scheduled to issue rate cuts and market headwinds decisions. 

Economists expect the ECB to cut rates on Thursday, with officials resonating the cost cuts to price stability risks and renewed market stress. 

Last Thursday, ECB President Christine Lagarde mentioned that the central bank has tools to manage emerging threats. It will be the second time in two years that the ECB faces market fallout because of a Federal Reserve decision, the last time being the 2023 collapse of Silicon Valley Bank.

United States: Fed speakers and fresh economic data to look forward to

Chair Jerome Powell is scheduled to speak Wednesday before the Economic Club of Chicago, joined the same day by regional Fed presidents Jeff Schmid and Lorie Logan. Other Fed officials, including Governors Christopher Waller and Lisa Cook, will speak earlier in the week.

Investors are closely watching for signs the Fed may pivot to rate cuts because of easing inflation. Core consumer prices in the U.S. rose just 0.1% in March and 2.8% year-over-year, the lowest annual increase since March 2021, falling below market expectations. 

Retail sales data due Wednesday is expected to show a robust 1.4% monthly gain in March, partly caused by preemptive consumer purchases ahead of Trump’s 25% tariff on imported autos and parts. Vehicle sales surged to an annualized pace of 17.77 million, the strongest reading in nearly four years, according to Ward’s Intelligence.

Industrial production might dip by 0.2% due to a downtick in utilities demand and a manufacturing cool-off. Housing starts, due Thursday, are also predicted to decline as builders focus on reducing excess inventory.

Across the Atlantic, the Bank of Canada is contemplating the inflationary impact of the US tariffs before taking action. Canadian policymakers are reportedly “very cautious” about easing monetary conditions too quickly, especially with inflation risks resurfacing.

China foresees slowdown, will not bow down to the US

China is at the epicentre of Trump’s latest trade offensive pick-and-roll, and will have to employ new tactics to block any attempt to deface their domestic market. 

March export data is expected to show a slowing market momentum even before tariffs were imposed. First-quarter GDP, due Wednesday, may provide evidence of an economic slowdown, while CPI figures confirm consumer deflation for a second straight month.

Deteriorating trade ties with the US has not made China blink. On Friday, it responded by slapping 125% tariffs on all US goods, dismissing Washington’s trade policies as a “joke.”

Elsewhere in Asia, Singapore’s central bank is expected to ease policy on Monday, while South Korea is predicted to hold rates steady on Thursday. Inflation data is also due from India on Tuesday, New Zealand on Thursday, and Japan will come at the end of the business week.

Europe and EMEA in tightropes

In the UK, Tuesday’s jobs data is expected to show persistent wage growth, while Wednesday’s inflation print could report an economic slump. 

In the eurozone, core inflation fell to 2.4% in March, the lowest since early 2022, but still enough to leave policymakers cautious. Tuesday’s German ZEW investor sentiment survey and February industrial production data will help guide the ECB’s direction.

Elsewhere, Israel’s inflation rate is forecast to fall to 3.2%, staying just above its target range.

Turkey’s central bank will be meeting for the first time since political unrest following the detention of opposition leader Ekrem Imamoglu. Analysts are divided; some predict a pause, while others, including Goldman Sachs, mention a rate hike. 

On the African side, Namibia is projected to leave its benchmark rate unchanged at 6.75%, aligning with South Africa’s steady stance due to its currency peg. On Thursday, Botswana is also likely to hold rates at 1.9% for a fourth consecutive meeting as it battles stubborn inflation rates hovering at a six-month high.

Egypt could begin an easing cycle as inflation slows, though capital outflow concerns linked to US tariff volatility could prompt caution. 

South American fiscal discipline pays off 

In Argentina, President Javier Milei’s fiscal reforms have delivered a rare budget surplus, the first in more than a decade. March figures, due Wednesday, are expected to mark a 14th straight monthly surplus. As reported by Cryptopolitan last week, Milei secured a $20 billion agreement with the IMF to improve the South American nation’s economic state.

Peru will release GDP-proxy and labor data on Tuesday, expecting a better economic performance. The country, led by President Dina Boluarte, has now outperformed predictions for seven straight months, and its government sees growth reaching 4% this year and 5% in 2026.

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