Five months into Trump’s second presidency, the economic fallout has become impossible to dodge, and on Tuesday, it officially hijacked the agenda of the world’s top monetary officials.
At the European Central Bank’s annual retreat in Sintra, Portugal, Federal Reserve Chair Jerome Powell, ECB President Christine Lagarde, Bank of England Governor Andrew Bailey, Bank of Japan Governor Kazuo Ueda, and Bank of Korea Governor Rhee Chang-yong sat side by side for a public panel that, according to Bloomberg , wasn’t about strategy anymore, it was about surviving Trump.
With tariffs flying, inflation rising, and global trade thrown into a blender, all five officials are now stuck juggling growth risks and inflation threats directly linked to White House policy.
Christine and Powell haven’t been on a panel together since the same ECB event in 2024. That session ended up sounding more like a therapy group for central bankers stuck in political chaos. One year later, it’s no longer about stress; it’s now about real economic paralysis.
Central banks freeze as Powell signals caution
Powell said the Federal Reserve will not rush into any decision on interest rates, even as the US economy starts to cool. Consumer spending has slowed, and core inflation keeps rising. That mix has left the Fed stuck in a gray zone, unsure how aggressive it should be.
Bloomberg economist Stuart Paul explained, “Quickening core inflation and slowing spending will keep the Fed uneasy, fueling debate about the appropriate number of rate cuts this year.”
The Bank of England earlier this month also paused its rate changes, while Christine’s ECB, after cutting rates once recently, has signaled no follow-up moves for now.
Japan’s central bank isn’t expected to touch its benchmark rate before July 31, and South Korea’s monetary team is keeping a careful approach. All five are effectively frozen, not by market data, but by uncertainty over Trump’s next move.
Philip Lane, chief economist at the ECB, said in a podcast before the summit that the panel would be the week’s highlight. “You do need to step back, rather than just talk about ‘what are we going to do in July or September?’ to look at the underlying forces,” Philip said, adding that the panel would likely be “a very lively session.”
In Canada, the trade picture is getting worse. Exports to the US keep falling. Monday marks the start of Canada’s new digital services tax, which applies a 3% charge on US tech companies with Canadian revenue over C$20 million. Trump responded by cutting off trade talks with Canada entirely last Friday.
Asia’s economy gets hammered by tariffs
Asian countries are feeling the heat. This week brings a flood of PMI reports across the region, starting with China’s official gauge on Monday. It’s expected to show a third straight month of shrinking factory activity.
Trade tensions and persistent deflation are slamming production lines. More PMI readings from South Korea, Malaysia, Vietnam, Indonesia, the Philippines, and Taiwan will follow.
In Japan , the central bank’s Tankan survey on Tuesday is forecast to show large companies plan to increase capital investment by 10% this fiscal year. While sentiment among manufacturers is cooling, non-manufacturers are still holding near 34-year highs.
Regional trade reports are also due from Australia, Indonesia, Thailand, and Sri Lanka, while South Korea reports its June numbers. South Korea will also release CPI data, which could open the door for another rate cut. Indonesia will post its June inflation numbers as well.
Industrial output figures from India, Japan, and South Korea, plus household spending numbers from Japan, will round out the week.
Europe and Latin America brace for impact
Inflation reports from Germany and Italy come out Monday, expected to show small increases. The broader euro-zone inflation figure will hit 2%, right on target. Meanwhile, fresh factory data from France, Spain, and Germany is due Friday.
Christine’s ECB will also release its strategy review Monday, inflation expectations Tuesday, and meeting minutes Thursday. After Sintra, Christine and her team will head to Aix-en-Provence for another economic gathering.
On Thursday, the Swiss National Bank will release its Q1 foreign-exchange intervention numbers, followed by the country’s June inflation report, which is forecast to show consumer prices falling again.
Turkey will also release its June inflation rate, expected to drop to 35.2% from 35.4%, which could lead to a 300 basis point rate cut. The UK will publish its full Q1 GDP breakdown on Monday, while Andrew joins both the Sintra and Aix events.
In Latin America, Argentina will post April activity data Monday, following weaker-than-expected Q1 growth. Chile will publish its May numbers Tuesday, right after primary elections. Chile’s central bank kept rates steady in June, citing stronger domestic demand but concerns about global shocks. Its minutes are due Thursday.
Colombia’s central bank will release its meeting minutes Thursday, after it held rates on Friday. The Andean nation is dealing with fallout from its government’s decision to suspend the fiscal rule, a move that has triggered credit downgrades from S&P Global Ratings and Moody’s Ratings due to rising debt concerns and policy instability.
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