Trump announces the news of tariffs! The RBA may suspend interest rate hikes

The US dollar rose moderately on Monday, and the market's uncertainty about US tariff policies has mostly kept traders waiting and watching, waiting for Trump's trade policy to become clear.

FXStreet senior analyst Joseph Trevisani said: "The market is worried about the U.S. economy, especially the tariff policy and its impact on the Trump administration. No one knows exactly what Trump will do, no one knows how other countries will respond, and more importantly, no one knows how this will affect the economy."

The market is nervous about the new round of tariff measures that the White House will announce on Wednesday. Details are still limited, but Trump said Sunday night that almost all countries will be affected by tariffs.

Trump said his “reciprocal tariffs” were intended to start with “all countries,” which hit speculation that he might limit the scope of preliminary tariffs announced on April 2.

According to the Washington Post, Trump privately urged advisers to take a tougher stance over the weekend.

Asian market

China's official PMI data in March showed mild optimism, with the manufacturing index rising from 50.2 to 50.5, in line with expectations, the highest level in a year.

The production sub-index and the new order sub-index rose to 52.6 and 51.8 respectively. However, the employment index fell to 48.2, highlighting the continued weakness in the manufacturing labor market conditions.

Non-manufacturing activities also improved slightly, with the Purchasing Managers index climbing from 50.4 to 50.8, surpassing the expected 50.5.

Nevertheless, non-manufacturing employment worsened, with the index falling to 45.8 as the service industry and constructionZhuangye layoffs.

New Zealand's ANZ business confidence index fell slightly from 58.4 to 57.5 in March. The outlook for my own activities has increased from 45.1 to 4https://avatradescn.com8.6.

However, this data also gives a clear warning about inflationary pressures. Cost expectations soared from 71.3 to 74.1, the highest level in a year. Pricing intention climbed from 46.2 to 51.3, the highest level since May 2023.

Perhaps more importantly, the one-year inflation expectation also rose slightly from 2.53% to 2.63%, further above the Fed's 2% midpoint target.

ANZ marked the rising inflation signal as "a little disturbing" and warned that these developments could impact the Fed's enthusiasm for further rate cuts.

The rate cut appears to be locked at the April meeting and is believed to be likely to make a second rate cut in May. However, ANZ pointed out that the possibility of a third rate cut in July is now "more like a coin toss."

European Market

Fabio Panetta, a member of the ECB Management avatradescn.committee of Italy, warned that the battle against inflation "can't be said to be over" and urged cautious timing of interest rate cuts.

In a speech today, Panetta pointed out that the “contradictory” statement of U.S. trade policy exacerbates uncertainty, which shows that this unpredictability avatradescn.complicates the ECB’s path forward. Therefore, central banks must continue to monitor “all factors that may hinder the return to the 2% target”

Paneta highlights the balanced actions the ECB is now facing. On the one hand, geopolitical tensions and weak euro zone growth have led to sluggish consumption and investment, which helps alleviate inflationary pressures.

But on the other hand, the re-emergence of uncertainty—especially the uncertainty surrounding U.S. tariffs—means that the ECB must remain vigilant and not rush to relax policies.

European Central Bank President Christine Lagarde stressed that given the United States will begin imposing imminent tariffs on April 2, Europe needs to take more control over its economy in the future.

In an interview with Radio France International, Lagarde reconstructed the narrative surrounding “Liberation Day”, saying that although the United States sees it as a step towards sovereignty, Europe must use it as a turning point—“step towards independence.”

Lagarde reiterated her previous estimate that U.S. tariffs could reduce euro zone growth by about 0.3% in the first year. If Europe takes retaliatory measures to retaliate, the negative impact may deepen to 0.5%.

In terms of inflation, LagaGermany pointed out that controlling inflation is still a "long-term war". She stressed that while some progress has been made, inflation needs to fall in a sustainable way. This requires careful calibration of interest rate policies, she said.

U.S. Market

Richmond Fed Chairman Thomas Barkin stressed growing concerns about the economic impact of the Trump administration’s upcoming tariffs. He told CNBC that tariffs could both exacerbate inflation and put pressure on the labor market.

"Saying I'm nervous about both of these things," Barkin said, suggesting that the path forward for monetary policy remains highly dependent on data.

Barkin stressed: "There is a lot of uncertainty now, and I think it gives us a reason to wait and see how things go.

New York Fed Chairman John Williams warned that the inflationary impact of new U.S. tariffs may be “more lasting” than initially expected.

In an interview with Yahoo Finance, Williams stressed that while prices are expected to rise immediately, the real impact of tariffs "maybe it will be fully within a few years." Feel it.” He stressed the importance of not only monitoring direct price changes, but also monitoring the importance of “indirect effects” that ripples over time in the wider economy. Williams said: “It’s too early to be able to draw specific conclusions on this,” noting that the Fed needs to be open to “how long will these impacts on inflation and the economy last.”

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