Many investors are closely watching markets this week as more than a dozen central banks are set to update their monetary policies amid economic uncertainty in the wake of US President Donald Trump’s erratic tariff moves.
By the close of Friday, central banks — including Taiwan’s central bank, the US Federal Reserve, the Bank of Japan, the Swiss National Bank and the Bank of England — are to unveil their latest interest rate decisions and economic projections, revealing how policymakers view the risks in the year ahead.
The market focus would primarily be on the Fed’s interest rate decision due tomorrow. Most analysts expect the US central bank to keep rates unchanged, but they would pay special attention to its policy statement and Fed Chairman Jerome Powell’s news conference for hints at what the bank might do next.
Meanwhile, the Bank of Japan is projected to keep rates unchanged at its meeting tomorrow, yet any hawkish commentary by its policymakers that might further boost the yen, which is already a big winner versus the US dollar this year, warrants attention.
In Taiwan, a rate cut is also unlikely after inflation data showed that a downward trend continued in the first two months of this year and as demand-driven inflationary pressure has slowly eased.
At a meeting of the legislature’s Finance Committee on Thursday, central bank Governor Yang Chin-long (楊金龍) said prices were stable and that inflation expectations might not be too high, while projecting that inflation this year would be at about the bank’s alarm level of 2 percent, after factoring in the effects of anticipated increases in electricity rates and railway tickets.
Other data also suggest that Taiwan’s underlying growth trends remain solid, indicating no urgency for the central bank to cut rates. For instance, exports in the first two months of this year increased 16.8 percent year-on-year, even higher than the growth of 9.1 percent in the fourth quarter of last year, while survey data such as the S&P Global purchasing managers’ index pointed to a sustained expansion of the nation’s manufacturing sector for the 11th consecutive month last month.
With most central banks not expected to alter their monetary policy decision any time soon, it seems that investors are more concerned about global macro uncertainty over inflation, as Trump’s tariff threats cast an unfavorable shadow over markets.
That shift in investors’ focus also explains why disappointing US economic data and market corrections on Wall Street have added concerns that the US economy might be headed toward a recession.
Even as Trump has repeatedly said that the long-term gains from his tariff agenda would outweigh the market turbulence, his second term shows a shift in focus — caring less about the stock market and more about using tariffs to revive US manufacturing, and bring structural changes to the US economy.
No one else can explain Trump’s economic blueprint better than US Secretary of the Treasury Scott Bessent. During an interview with CNBC, he said the US policy focus would not be on Wall Street, adding that low interest rates are a key policy tool for Trump.
He also said the US economic model should shift away from a heavy dependence on expanding government spending toward private sector-driven growth. Bessent, like Trump, downplayed market fears around tariffs and highlighted the goal of bringing jobs back to the US.
Thus, with the Trump administration pressing ahead with tariffs to shape its new economic and global security paradigm, central banks are expected to prioritize stability. As European Central Bank President Christine Lagarde remarked last week, monetary policymaking just got harder.
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