The war of duties triggered by Trump is greatly changing the prospects of economic growth, but also the view on next moves central banks, primarily Fed and ECBwhich could proceed with cuts of the more decisive or more frequent rates, but also with an attitude of greater caution. As always, the situation is very different on the two sides of the ocean due to different risk factors and, above all, of thedivergent trend of the changes.
Federal Reserve at a crossroads
A lot changes for the US central bank, which will have to do difficult choicesunder penalty of a new inflationary wave or, worse, The stagflation hypothesis Already ventilated by Powell. A hypothesis that has already reflected on the dollar, making it depreciate, and that forces the central bank uses to targeted interventions, despite the pressure from the White House For new rates cuts, such as “care” against the recession evoked by several rating agencies.
Before the “liberation day”, the Fed was set on two cuts of the rates this year, but the situation has radically changed Because of the extension of the announced duties, which make fear for a braking of the economy and, at the same time, for an inflationary surge. A manual crisis that takes the name of stagflation and forces the monetary authorities a proceed with caution and analyze the situation more deeply.
But there is no shortage of “Political” pressureswith Trump accuses the president of the Fed of always being late” and says this would be the “Perfect moment for cutting rates”.
In front of this state of affairs, the conclusions of analysts However, they are not uniform. There are those who, at this point, foresee more caution on rates This year and confirms the two backed interventions, and who, on the other hand, aims at a greater interventionism In the immediate, to dispel the risk recession, and then a quick turn next year to cool inflation. The drop in bond yields overseas already anticipates this second scenario, as well as the dollarwho lost land against the euro, rejecting the single currency above 1.10 USD.
For S & p The central bank will remain stable for most of the year, Cutting the rates only in the last part of 2025but does not exclude a more aggressive intervention in a scenario in which consumer spending and the demand for work fall abruptly.
ECB forward with multiple cuts
Less uncertainty about what will be the choices of the ECBThat must continue to cut interest rates, to weaken the euro e Promote the competitiveness of exports European, in the face of a less favorable tariff policy. A policy that will be the more incisive the more the euro will appreciate towards the green ticket. There Single currencyin this regard, has rebounded over 1.10 USD, threshold above which is maintained this week, from the minimums of $ 1.01 reached in recent months.
A scenario that implies Greater rates cuts by the ECB to counter the force of the euro and a safe recession in Europe. Deutsche Bank provides a negative impact of the duties on Eurolandia GDP equal to -0.4/-0.8% and provides for a growth 2025 per +, 25%/ +0.5% against +0.8% previous. In terms of monetary policy, President Lagarde had reported one possible Pause in April and another cutting of the rates in Juneto get to a 2% level by the end of the year, but the current scenario suggests Another cut already at the meeting of April 17th and a drop in rates at the end of 2025 at 1.75%. A choice shared by S & p which proposes for a More cut this year compared to the expected scenario.
What about China?
Also for the China More decisive interventions are expected in favor of a devaluation of the yuanwhich could be directed, through market interventions, or indirect, through maneuvers on interest rates. Beijing already has responded promptly and decision to the new duties imposed by Trump and could also press on the Banca Popolare CinesAnd to follow a more combative approach to support exports.
Rifugio currencies run
In a situation to say the least stormy for the equity markets, which have returned to collapse, i Capitali on the run go on the Yen which continues to earn ground on the dollar and pushes it to 145.48 (-0.99%), as well as on the Swiss francwhich sees a dollar descent to 0.8462 (-1.67%).
