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President Donald Trump urged the Federal Reserve to cut interest rates, as economic uncertainty grows clashing with the U.S. central bank as its officials assess the economic impact of his tariff strategy. The flood of Chinese goods into emerging economies like Indonesia is dismantling jobs in sectors such as textiles and apparel. Meanwhile, global monetary policy shows diverging trends: Brazil raised its rates, Switzerland lowered them, and Sweden kept them unchanged. The central banks of the UK and South Africa are expected to maintain borrowing costs steady.
Federal Reserve Chair Jerome Powell described the 2021 price surge as “transitory” but later admitted that the term should be discarded. Core inflation remains at 2.6%, still above the 2% target. Powell surprised markets by stating that Trump’s newly imposed tariffs would have a transitory effect, similar to those in 2018. While acknowledging differences between both periods, the Fed maintained its forecast of two rate cuts by year-end. His reassuring tone boosted the S&P 500, which closed over 1% higher, and strengthened Treasury bonds.
The exact scale of the new tariffs and their ultimate impact remain unknown. Trump plans to announce a package dubbed “the big one” on April 2. The Fed projects core inflation to reach 2.8% by the end of 2025, while GDP is expected to slow to 1.7% in the fourth quarter, less than half the growth recorded in 2024. Powell emphasized that monetary policy will remain flexible in response to new economic developments.
In Australia, employment unexpectedly declined in February, weakening the currency and government bond yields, fueling expectations of further rate cuts. In Colombia, President Gustavo Petro is close to appointing Germán Ávila, director of the state banking group, as his next Finance Minister. Meanwhile, Finland retained its title as the world’s happiest country for the eighth consecutive year, while the U.S. dropped to 24th place, its worst ranking in history.
Banks and Markets on alert: Banks expected a predictable version of Trump to sustain their valuations but got the opposite. His confrontational…
Marriages in South Korea saw the highest increase on record, a promising sign for a nation striving to reverse its world-lowest birth rate. The government has intensified economic incentives for families and strengthened maternity support measures.
Powell stated in November that the White House lacked the legal authority to remove the Fed’s leadership. However, a new court case could challenge that interpretation. On Tuesday, Trump dismissed two Democratic members of the Federal Trade Commission, echoing a precedent set by Franklin D. Roosevelt in 1933. The Supreme Court may review whether Congress can limit presidential power to remove officials. If the ruling from the 1930s is overturned, the Federal Reserve’s independence could be in serious jeopardy.
