The evolution of the Commercial policy of Trump It leaves no room for doubt: the duties war began in the worst way and risks jeopardizing global growth. The impact will feel First in Europe which in the USA and will also condition inflation, which will go up due to protectionist policies.
This will have important implications on choices monetary policy of Fed and ECBwhich will be forced to react more and more divergently to the evolution of the macroeconomic scenario. The EutotoWer is preparing to confirm full support for the economy, with repeated rates cuts this year, while the Federal Reserve It could also be forced to stop rates cuts this year, before reversing broken in 2026.
Fed fears impacts on inflation
The president of the Fed of New York, John Williams, he said he expects that i duty make you go up To a certain extent inflationwhile recognizing that for now the interest rates policy of the central bank is in the right position and does not need to be changed. “There is a lot of uncertainty: we don’t know how long the rates will remain in force. We do not know what other countries could do in response to this, “added the banker, adding” I think the current policy is good. I see no need to change it immediately “and confirming that the Fed intends to maintain the current “moderately restrictive” setting.
The reactions awaited by the US Central Bank
The Fed at the moment maintains a cautious attitude Regarding the impact of the commercial war, of which the exact extension and the effects on the economy is not yet known. But if the commercial war It should be carried out to the bitter end, an impact on inflation is announced, such as to condition monetary policy of the Fed.
And if i tradersconsidering the negative effects on the economy, bet on At least three cuts of interest rates of 25 basis points this year, the attitude of analysts it is more cautious and for now the expectation of two cuts from 25 points basis in June and September.
But someone also has an attitude more prudent and hypothesizes one break throughout 2025. “We believe that the Fed has finished its locking cycle,” analysts say analysts Schroderssuggesting “all signals indicate overheating of the economy, suggesting that the neutral rate is much higher than the 3% Fed estimate and that rates increases will be necessary”. These could arrive this year, even if the uncertainty about the administration’s policies will require an expectant approach. Instead, we continue to predict an increase of 50 basis points in 2026 “.
What the ECB will do tomorrow
The moment of the ECB is closer: the Monetary policy meeting tomorrow will probably close with a Another cutting of the rates of 25 base points, Although many are to hope for a more decisive cut of 50 points. Most analysts await that the ECB reduces the interest rates of 25 basis points in the meeting on March 6 with a rate on deposits that would reach 2.50%. Heterogeneous are the opinions on What will do after the Eurotower, even if l‘approach “Meeting for meeting” It is generally confirmed.
Analysts of Allianz Global Investors they consider the expectation of the markets “plausible”, which “are taking advantage of consecutive cuts in the ECB meetings until June “ and a rate on deposits seen at 2% by half the year and also lower before the end of the year.
For Pictet instead “it is likely that the language is softened “ without the ECB “abandon the reference to the restrictive level of the rates”, and this “for avoid excluding a priori the possibility of another cut in April“.
“The current context of high uncertainty leaves no room for Forward Guidance and we expect the ECB to underline to underline that the decisions will be a meeting by meeting”, underline the experts of Pimcoreiterating that “the data flow in the coming months will determine the speed and the scope of the monetary attachment to future meetings “.
