US Fed, BoJ, BoE Pause Rate Hikes Amid Trade Tariff Concerns

Quick summary

• Central bankers in the US, Japan, and UK opted to hold interest rates steady this past week, aiming for cautious policy amid tariff-related economic impacts.
• Federal Reserve Chair Jerome Powell stated that inflationary effects of tariffs are likely transitory.
• The Bank of Japan added trade policies to its list of risks in its outlook.
• Bank of England Governor Andrew Bailey underscored the need for careful decision-making amid global uncertainties.
• Globally, nations like Sweden (riksbank), Taiwan, Russia, and South Africa also maintained rates steady while Switzerland, Iceland, and Morocco lowered them. Chinese banks held their lending rates unchanged for a fifth month.
• Trump’s trade policies are contributing to slower global growth and higher inflation risks if escalations continue further.
• India plans new steel trade tariffs as part of increasing global protectionism following US actions on imports from China and others.

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Indian Opinion Analysis
The decision by major central banks to hold steady on interest rates underscores significant caution as global economies navigate the ramifications of rising geopolitical tensions and protectionist policies such as tariffs levied by the US administration. For India specifically, plans for steel trade tariffs signal alignment with a growing trend worldwide toward safeguarding domestic industries amidst competitive pressures from large-scale producers like China.While such protective measures may bolster India’s steel sector against global oversupply pressures temporarily, they risk creating longer-term frictions in international trade relations given their potential impact on export-oriented businesses reliant on foreign markets unhindered by barriers. It will be essential for policymakers to balance protectionist strategies with broader economic resilience efforts to mitigate adverse effects resulting from reduced international collaboration or retaliatory measures globally.