Craig Stirling
8 min read
In This Article:
(Bloomberg) -- The global economy’s concussion from five months of Donald Trump’s presidency is likely to feature when five of the world’s leading central bank chiefs discuss monetary policy in public on Tuesday.
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From tariff-related trade ructions to oil-price gyrations caused by Middle East hostilities, the question of how to handle the fallout from White House decisions may loom large as Federal Reserve chief Jerome Powell speaks on a panel with peers from the euro zone, Japan, South Korea and the UK.
The high-powered gathering at the European Central Bank’s annual retreat in Portugal will be the first time that its president, Christine Lagarde, has shared a stage for a public discussion with her US counterpart since the same event in 2024.
Back then, when they spoke alongside former Brazilian central bank chief Roberto Campos Neto, their discourse morphed into something resembling a group therapy session on the trials of setting interest rates at times of political stress — a premonition, in its own way, of the turbulence to come.
One year on, and at the halfway point of 2025, global policy is almost paralyzed by the need to navigate risks posed both to inflation and growth in the wake of Trump’s actions — a challenge highlighted by the Bank for International Settlements in a report on Sunday.
Such a trade-off is faced by all the central bank chiefs who will speak on the panel in the hilltop resort of Sintra. Powell insisted on Tuesday that the Fed is in no rush to change rates, and earlier this month the Bank of England left borrowing costs on hold too.
What Bloomberg Economics Says:
“Quickening core inflation and slowing spending will keep the Fed uneasy, fueling debate about the appropriate number of rate cuts this year.”
—Stuart Paul, US & Canada economist. For full analysis, click here
The ECB itself, having just delivered a reduction, isn’t ready to do any more for now, and the Bank of Japan is widely expected to keep its benchmark unaltered at its July 31 meeting. The Bank of Korea is insisting on acting cautiously too.
In a podcast before this week’s retreat, ECB Chief Economist Philip Lane emphasized the panel as the highlight of the whole gathering, whose theme of “Adapting to Change” seems something of an understatement.
