Global Central Bank Group warns Trump’s policies could fuel economic uncertainty

The Bank for International Settlements (BIS) has warned that U.S. President Donald Trump’s trade war and deregulation plans could disrupt financial stability, fuel inflation, and increase market volatility, posing challenges for global central banks.

The Bank for International Settlements (BIS) has issued its first public warning about the risks posed by Donald Trump’s economic policies, citing trade tensions, financial deregulation, and fiscal uncertainty as key threats to global stability.

Speaking in Mexico City, BIS chief Agustin Carstens highlighted the growing concerns among central bankers, stating that Trump’s approach to trade, fiscal policy, and immigration could trigger economic disruptions.

“Such pervasive policy uncertainty will affect central banks in several ways,” Carstens said, warning that market instability could worsen.

Key Concerns Raised by BIS:

🔹 Slower Economic Growth – Businesses may delay investment and households could hold off on major purchases due to policy unpredictability.
🔹 Market Volatility – Currency fluctuations and asset price swings are expected to intensify as investors navigate tariff disputes with Canada, Mexico, and China.
🔹 Rising Inflation – A weaker currency and financial turbulence could drive up inflation, forcing central banks to intervene.
🔹 Debt Risks – Loose fiscal policies could lead to higher debt levels, potentially destabilizing global financial markets.

Impact on Interest Rates and Global Economy

Carstens also warned of a widening gap between U.S. and global interest rates, driven by America’s stronger economic performance compared to other major economies. If this trend continues, it could disrupt capital flows, weaken foreign currencies, and create imbalances in global financial conditions.

“An abrupt repricing of public debt could put financial stability at risk,” Carstens cautioned, raising concerns about potential debt crises in emerging markets.

Global Financial Rulemaking Under Pressure

Trump’s deregulation agenda has sparked fears of a weakened financial oversight system, particularly in Europe, where regulators worry about a global race to loosen financial supervision.

While the BIS has traditionally refrained from direct political criticism, its latest warning reflects the growing unease among global central banks as they attempt to navigate the uncertainty of Trump’s second term.

As financial leaders prepare for upcoming policy decisions, the lasting impact of Trump’s economic strategy remains uncertain, but the warning from the world’s top central bank body signals that the stakes are higher than ever.

Tags

News Trump Bank

Comments (0)

What is your opinion on this topic?

Leave the first comment