How is the major central banks preparing to face the chaos of customs duties?

This week’s attention is directed to the central bank meetings within the Group of Seven, where monetary policy makers face a new challenge to the escalation of the trade war between the United States and China, and its repercussions on global economic stability, according to a report published by the American Bloomberg Network.

Europe and Canada are under a microscope

Canada Central Bank is expected to maintain interest rates unchanged in its meeting on Wednesday, in an attempt to protect the economy from inflationary effects resulting from mutual customs definitions with the United States.
As for the European Central Bank, it is likely that it takes a different step, as expectations indicate that it may be made to reduce interest by a quarter of a percentage point during its upcoming meeting, in light of the increasing economic pressures on the euro area.

The American federal is waiting

Meanwhile, the US Federal Reserve will not make its next decision before May 7, holding central banks in Frankfurt and Ottawa responsible for calming the markets and providing clear references on monetary policies, until Washington’s vision becomes clear.

Lagarde: We have the tools to counter the disturbances

Christine Lagarde, President of the European Central Bank, warned of the risks of increasing market fluctuations, stressing that the bank “has adequate tools to maintain price stability and financial stability,” noting that the two are closely interrelated.
Also read: How do companies try to escape the high customs duties of Trump?

Confusion in the European decision

It is noteworthy that this is the second time in two years that Europe finds itself confused about the interest rate, after the turmoil that followed the collapse of Silicon Valley in 2023, when the European Central decided to proceed with raising interest at half a percentage despite the crises.

Decisions expected from Asia and the Middle East

The importance of this week extends to decisions from other central banks, including South Korea and Turkey, in addition to the issuance of central economic data, such as Chinese GDP, and inflation reports from Britain and Japan.

China is under pressure … and does not give up in front of Trump

China is currently facing increasing pressure due to the high American customs duties, amid a slowdown in export growth and a shrinkage in consumer prices for the second month in a row. Despite these challenges, Beijing responded on Friday by raising customs duties on all American goods, describing the Trump administration decisions as “joke”.
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American economy at a crossroads

For his part, investors seek to obtain signals from the Federal Reserve on the direction of monetary policy, especially in light of the weakness of the dollar, the high returns of American bonds, and the decline in shares related to trade.
It is expected that the Federal President Jerome Powell will present a comprehensive evaluation of the economic conditions in a speech on Wednesday to the Economic Club in Chicago, in conjunction with interventions from other council officials on the future of banking services and monetary policies.