LONDON, April 17 (Reuters): US President Donald Trump's tariffs have darkened the global economic backdrop, forcing big central banks to reassess their next steps.
Policymakers outside the United States now look more likely to cut interest rates than they would have done otherwise - or in Japan's case raise them less.
SWITZERLAND
The Swiss National Bank does not meet until June, but it will be an interesting one, as markets expect it to cut rates to zero from 0.25 per cent.
The SNB says it would rather not go further and return to negative rates, but a surging Swiss franc is hurting an export-heavy economy and could push Switzerland into deflation.
The franc is the best performing developed market currency since Trump's April 2 tariff announcement. The SNB's other oft-used policy tool, intervening to weaken the franc, could provoke the Trump administration, which says currency manipulation was one of the motivations for its tariffs.
CANADA
The Bank of Canada held rates at 2.75 per cent on Wednesday - its first pause after seven consecutive cuts - saying it wanted more information on the impact of tariffs.
Governor Tiff Macklem said uncertainty made it difficult to make economic predictions, noting: "Forecasts for economic growth are of little use as a guide to anything."
Still, traders bet on possibly two more cuts by year-end.
NEW ZEALAND
The Reserve Bank of New Zealand cut its key rate by 25 basis points to 3.5 per cent last week, with a total of 200 bps of easing since August.
New Zealand is exposed to China, leaving it at risk of damage from a sustained China-US trade war. Markets expect roughly three more cuts this year, even though data Thursday showed higher-than-expected inflation.
SWEDEN
Sweden left rates at 2.25 per cent in March and expects to keep them at this level for now.
Its Riksbank had been in the dovish camp, easing rates from 4 per cent to support a sluggish economy, but markets agree with policymakers that further cuts are unlikely.
EURO ZONE
The European Central Bank cut interest rates for the seventh time in a year on Thursday and hinted more easing could follow.
It said the growth outlook had deteriorated due to rising trade tensions, and the volatile market response would likely cause financial conditions to tighten.
