Global Central Banks React to Tariff Pressures With Mixed Rate Cut Outlooks

Key Takeaways:Fed signals rate cuts may be delayed until fall amid tariff concerns.ECB and BoE eye autumn easing due to export risks and weak growth.Divergent outlooks reflect local economic conditions and trade policy impacts.Global central banks are grappling with mounting tariff-related risks, leading to divergent expectations for interest rate policy across major economies, according to recent data compiled by Jinshi.U.S. Federal Reserve: Wait-and-See ModeFederal Reserve Chair Jerome Powell noted that tariff risks have not yet fully materialized but warned that they could delay rate cuts. While Goldman Sachs sees slightly better than 50% odds of a September rate cut, BNP Paribas maintains that the current impact of tariffs on U.S. inflation remains minimal.European Central Bank: Export HeadwindsThe European Central Bank (ECB) is reportedly concerned about euro appreciation and its impact on exports. Commerzbank anticipates that a rate cut could help absorb the negative effects of trade barriers, while ANZ forecasts a 25 basis point cut in September, citing continued weak eurozone growth.Bank of England: Growth vs. InflationThe Bank of England (BoE) faces conflicting pressures from stubborn inflation and sluggish economic output. Goldman Sachs projects the BoE could begin easing in August, while Bank of America expects multiple rate cuts in the second half of 2025.Bank of Japan: Minimal Impact, Tightrope AheadThe Bank of Japan (BoJ) has largely sidestepped the worst-case tariff scenario, though profit margins for exporters remain under strain. Capital Economics believes a moderate tariff increase would not derail expectations for a rate hike in October.Bank of Canada: Recession RiskThe Bank of Canada (BoC) is under pressure as economic data points to a contracting economy and rising unemployment. Deloitte Canada forecasts further economic shrinkage, while Capital Economics anticipates at least two additional rate cuts in 2025.Reserve Bank of Australia: On Hold Amid UncertaintyThe Reserve Bank of Australia (RBA) is adopting a cautious stance. Despite slowing inflation, the RBA is holding off on cuts due to economic uncertainty. Financial markets are pricing in a potential rebound and await more clarity on economic data before adjusting expectations.As global trade dynamics evolve, central banks are navigating a complex landscape of tariff risks, inflation pressures, and fragile recoveries, each adjusting its policy path to domestic realities and external shocks.