financetom
Economy
financetom
/
Economy
/
BIS warns on risks to economies, central bank policy over Trump uncertainties
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
BIS warns on risks to economies, central bank policy over Trump uncertainties
Feb 6, 2025 5:27 PM

LONDON (Reuters) - The world's leading central bank umbrella group, the Bank for International Settlements, has delivered its first public warning about the risks posed by U.S. President Donald Trump's trade war and deregulation plans.

BIS head Agustin Carstens said trade developments were a prominent worry now, while fiscal policy, regulation, immigration policy and the broader geopolitical backdrop all carry major question marks.

"Such pervasive policy uncertainty will affect central banks in several ways," Carstens, who was previously governor of the Bank of Mexico, said in a speech delivered in Mexico City.

Economic growth is likely to suffer, he said, as companies postpone investment and households put off large purchases.

Financial markets are also likely to be more volatile, given the sizeable currency and asset market swings seen in recent weeks as investors have struggled to gauge the tariff threats to Canada, Mexico and China.

"Some of these asset price movements, particularly exchange rate depreciations, could be inflationary," Carstens said, urging central banks to respond by sticking to their primary job of keeping inflation in check.

The BIS is a forum for the world's top central banks, helping to manage their foreign exchange reserves and it also hosts the Basel Committee for Banking Supervision.

Trump's re-election has threatened to shatter the already-fraying global consensus on financial rulemaking, triggering worries, especially in Europe, of a global race to the bottom in supervision.

Carstens also warned about loose fiscal policies and a possible further surge in debt, which typically fuels inflation and buffets currencies. "In the extreme," he said, "an abrupt repricing of public debt could put financial stability at risk."

There is also the danger of an amplified divergence between U.S. interest rates and those of other major economies.

"Economic growth in the United States has been much stronger than in much of the rest of the world of late," Carstens said. "Should this continue, we could see greater variability in (central bank) policy settings, with flow-on effects to capital flows, exchange rates and global financial conditions."

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
US weekly jobless claims increase moderately, Haver Analytics estimates
US weekly jobless claims increase moderately, Haver Analytics estimates
Nov 6, 2025
WASHINGTON (Reuters) -The number of Americans filing new applications for unemployment benefits increased marginally last week, Haver Analytics estimated on Thursday, pointing to stable labor market conditions in October despite a surge in announced layoffs. Initial claims for state unemployment benefits rose to a seasonally adjusted 229,140 for the week ended November 1 from 219,520 in the prior week, Haver...
Fed right to cut rates to support job market, Musalem says
Fed right to cut rates to support job market, Musalem says
Nov 6, 2025
NEW YORK (Reuters) -Federal Reserve Bank of St. Louis President Alberto Musalem said on Thursday the U.S. central bank has been right to cut interest rates to help the job market. The cuts have been appropriate but we have to be very careful to continue to lean against above-target inflation, while continuing to provide some insurance to the employment sector,...
Factbox-Major cases involving Trump before the US Supreme Court
Factbox-Major cases involving Trump before the US Supreme Court
Nov 6, 2025
(Reuters) -The U.S. Supreme Court has dealt with a series of cases involving challenges to the actions of President Donald Trump and his administration since he returned to office in January. These cases have involved the U.S. Federal Reserve, tariffs, immigration policy, domestic troop deployment, birthright citizenship, transgender rights, firings of federal workers and agency officials, dismantling the Education Department,...
Fed's Williams: Fed may soon need to expand balance sheet for liquidity needs
Fed's Williams: Fed may soon need to expand balance sheet for liquidity needs
Nov 7, 2025
NEW YORK (Reuters) -Federal Reserve Bank of New York President John Williams said on Friday that the central bank, which last week decided to stop shrinking its stock of bonds, may soon need to grow its balance sheet through bond purchases. The next step in our balance sheet strategy will be to assess when the level of reserves has reached...
Copyright 2023-2026 - www.financetom.com All Rights Reserved