ECB’s Lagarde warns US-EU tariff war could slash eurozone growth by 0.5%

    Speaking to a European Parliament committe, ECB President Christine Lagarde warned that US tariffs of 25% on European imports could have a significant negative impact on the Eurozone economy, cutting growth by around 0.3% in the first year.

    If the EU responds with retaliatory tariffs, the impact could deepen, reducing Eurozone GDP growth by as much as 0.5%.

    While the sharpest impact would be felt in the first year, Lagarde emphasized that the effects would be long-lasting, leaving a “persistent negative effect on the level of output”.

    Beyond growth concerns, inflation outlook would also become highly uncertain in such a scenario.

    In the short term, EU retaliatory measures and a weaker Euro—stemming from lower US demand for European products—could push inflation higher by around 0.5%.

    In the medium term, weaker economic activity would dampen price pressures, ultimately counteracting the initial inflationary impact.

    Full opening remarks of ECB’s Lagarde here.

    SNB cuts 25bps, flags downside inflation risks and uncertain growth outlook

      SNB delivered a widely expected 25bps rate cut, bringing the policy rate down to 0.25%. In its statement, SNB justified the decision by pointing to low inflationary pressures and “heightened downside risks to inflation”.

      The central bank acknowledged that Switzerland’s economic outlook has become “considerably more uncertain”, particularly due to rising global trade tensions and geopolitical risks. The external environment remains a key threat to growth.

      The new conditional inflation forecast suggests that inflation will remain well within its price stability range, averaging 0.4% in 2025, and 0.8% in both 2026 and 2027. These projections assume that the policy rate stays at 0.25% throughout the forecast horizon.

      On the growth front, SNB expects GDP to expand between 1% and 1.5% in 2025, with domestic demand benefiting from rising real wages and easier monetary conditions. However, weak external demand is expected to act as a drag on growth. For 2026, SNB anticipates GDP growth of around 1.5%.

      UK payrolled employment rises 21k in Feb, unemployment rate unchanged at 4.4% in Jan

        In February, UK payrolled employment rose by 21k (0.1% mom). However, median monthly pay growth slowed to 5.0% yoy from 6.0%, reinforcing signs that wage pressures are gradually easing. However claimant count, surged 44.2k, far exceeding expectations of 7.9k.

        In the three months to January, unemployment rate remained unchanged at 4.4%, slightly better than the expected 4.5%. Average earnings including bonuses rose by 5.8% yoy, just below expectations of 5.9%. Excluding bonuses, wages rose 5.9% yoy, in line with forecasts.

        Full UK labor market overview release here

        SNB to cut, BoE to hold, a look at GBP/CHF

          Two major central banks will announce their monetary policy decisions today, with SNB leading, followed by BoE.

          SNB is widely expected to lower its policy rate by 25bps to 0.25%. With inflation at just 0.3% in February, well below the mid-point of target range, there is both room and necessity for further easing to keep medium-term inflation expectations anchored closer to 1%.

          However, the urgency for additional policy support appears to be diminishing, especially with growing optimism around Eurozone economy. Stronger Eurozone growth, driven by major fiscal expansion plans, is expected to lift Euro and boost demand for Swiss exports, which could help mitigate recession and deflation risks in Switzerland.

          A Reuters poll of economists showed that most expect rates to remain at 0.25% by year-end, while 10 foresee a move to 0%, and only three expect SNB to maintain the current 0.50% level.

          Meanwhile, BoE is widely expected to hold its Bank Rate steady at 4.5%, with little change to its cautious forward guidance. A Reuters poll of 61 economists showed unanimous expectations for a rate hold today, with the next cuts projected for May, August, and November.

          The key focus for markets will be whether any additional Monetary Policy Committee members join Catherine Mann and Swati Dhingra in voting for an immediate rate cut, which could signal a shift toward a more dovish stance in the coming months.

          Technically, while GBP/CHF extended the rally from 1.1086, it has clearly struggled to find convincing momentum. It’s plausible that this rise is the third leg of the corrective rebound from 1.0741, which has already completed after meeting 61.8% projection of 1.0741 to 1.1368 from 1.1086 at 11437. Break of 1.1299 support will solidify this bearish case and bring deeper fall back to 1.1086 support. Nevertheless firm break of 1.1501 will pave the way to 1.1675 resistance next.

          Australian employment plunges -52.8k in Feb, unemployment rate unchanged at 4.1%

            Australia’s employment dropped sharply by -52.8k in February, significantly missing market expectations of 30k gain. The decline was broad-based, with full-time jobs falling by -35.7k and part-time employment down by -17k.

            Unemployment rate remained steady at 4.1%, in line with forecasts. The participation rate declined by -0.4% to 66.8%, suggesting that fewer people were actively seeking work, which helped keep the jobless rate from rising. Additionally, monthly hours worked fell by -0.4% mom, reflecting softer labor market conditions.

            The Australian Bureau of Statistics attributed part of the decline in employment to fewer older workers re-entering the labor force. However, the broader trend still points to resilience in the job market, with employment up by 266k people, or 1.9%, compared to last year. The annual employment growth rate remains close to the 20-year pre-pandemic average of 2.0%.

            Full Australia employment release here.

            New Zealand GDP exits recession with stronger-than-expected 0.7% qoq growth in Q4

              New Zealand’s economy expanded by 0.7% qoq in Q4, surpassing expectations of 0.4% qoq and officially pulling the country out of recession. However, the broader picture remains mixed, as GDP still declined by -0.5% yoy, reflecting the lingering impact of previous contractions.

              The positive quarterly growth was driven by expansions in 11 out of 16 industries, with the rental, hiring, and real estate sector, retail trade, and healthcare services leading the gains.

              Despite the overall improvement, some key sectors struggled, with construction and information media & telecommunications posting declines.

              Still, a major positive takeaway from the report is that GDP per capita rose by 0.4% in Q4, marking its first increase in two years.

              Full NZ GDP release here.

              US stocks recovered as Fed sticks to two rate cut outlook for 2025

                US stocks closed higher overnight, and extended their near-term consolidations. Investors were somewhat relieved that Fed maintained its outlook for two rate cuts this year. However, the central bank also introduced a note of caution, warning in its statement that “uncertainty around the economic outlook has increased” and that it remains “attentive to the risks to both sides of its dual mandate.”

                In the post-meeting press conference, Chair Jerome Powell explicitly addressed the impact of tariffs. He warned that “the arrival of tariff inflation may delay further progress” on disinflation. He also noted that Fed’s quarterly summary of economic projections does not show further downward progress on inflation this year, attributing this to new tariffs coming into effect.

                This acknowledgment reinforces the stance that while rate cuts remain in the pipeline, the timing and extent of policy easing will depend on how inflation evolves in the face of trade disruptions and supply chain adjustments.

                Fed left its benchmark interest rate unchanged at 4.25-4.50%, a widely expected move. Fed fund futures now assign roughly 70% probability that the next rate cut will come in June, compared to just 47% a month ago.

                Technically, S&P 500 turned into consolidations after falling to 5504.65 last week. 55 W EMA (now at 5596.07) could offer some support for a near term recovery. But risk will stay on the downside as long as 55 D EMA (now at 5873.77) holds.

                On resumption, fall from 6147.43, as a correction to the rise from 3491.58, should target 38.2% retracement at 5132.89.

                Fed holds rates, slows balance sheet reduction, downgrades growth outlook

                  As widely expected, FOMC kept interest rates steady at 4.25-4.50%. At the same time, Fed announced a key shift in its quantitative tightening strategy, stating that beginning in April, it will slow the pace of balance sheet reduction from USD 25B to USD 5B.

                  In its accompanying statement, Fed acknowledged that recent economic data continues to indicate “solid” expansion, with “low” unemployment and “solid” labor market conditions. Meanwhile, Fed noted that inflation remains “somewhat elevated”, reinforcing the need for cautious policymaking.

                  The updated economic projections showed no change in Fed’s rate-cut outlook, with the median federal funds rate projection still pointing to just two cuts this year, leaving rates at 3.9% by the end of 2025. Looking further ahead, Fed continues to see rates at 3.4% by the end of 2026 and 3.1% by the end of 2027

                  Fed’s GDP growth forecasts were revised downward, reflecting growing concerns over economic headwinds. The US economy is now expected to grow by just 1.7% in 2025, down from 2.1% in the previous forecast, while 2026 and 2027 growth projections were also slightly trimmed to 1.8%.

                  Meanwhile, core PCE inflation projections for 2025 were revised higher, from 2.5% to 2.8%, suggesting that price pressures may prove more persistent than previously anticipated. However, core inflation forecasts for 2026 and 2027 remained unchanged at 2.2% and 2.0%, respectively, signaling confidence that inflation will gradually trend back toward the 2% target.

                  Full FOMC statement here.

                  Full Fed SEP here.

                  Eurozone CPI finalized at 2.3% in Feb, core CPI at 2.6%

                    Eurozone headline CPI was finalized at 2.3% yoy in February, down from 2.5% yoy in January. Core CPI , which excludes energy, food, alcohol, and tobacco, eased slightly to 2.6% yoy from 2.7% yoy.

                    The largest driver of Eurozone inflation was services, contributing +1.66 percentage points, followed by food, alcohol, and tobacco (+0.52 pp). Non-energy industrial goods and energy made smaller contributions, with energy adding just +0.01 pps.

                    In the broader EU, inflation was finalized at 2.7% yoy, down from 2.8% yoy in January. Inflation disparities across member states remain stark, with France (0.9%), Ireland (1.4%), and Finland (1.5%) registering the lowest rates, while Hungary (5.7%), Romania (5.2%), and Estonia (5.1%) recorded the highest. Compared to January, inflation declined in 14 member states, remained unchanged in six, and increased in seven.

                    Full Eurozone CPI final release here.

                    Fed to stand pat, watch for signs of trade war fallout in new projections

                      Fed is set to keep interest rates unchanged at 4.25-4.50% today. The focus will be on the updated economic projections, which may drop hints that Fed is beginning to pre-empt a full-blown trade war into its outlook. Additionally, another key element to watch will be the closely followed “dot plot”, which will reveal whether Fed still expects two rate cuts this year.

                      Chair Jerome Powell’s press conference is important as usual, as he will need to balance Fed’s current economic assessment with the risks posed by US President Donald Trump’s trade policy. However, with no details on the big event of reciprocal tariffs on April 2, Powell is unlikely to offer any concrete guidance. Instead, he may just reiterate the central bank’s stance that it is “in no hurry” to cut rates and emphasize a data-dependent approach.

                      Currently, Fed fund futures indicate that June and September are the most likely timing for policy easing.

                      One key market reaction to watch will be 10-year Treasury yield, which recovery has clearly lost momentum well ahead of 55 D EMA (now at 4.389). Any dovish tilt from Fed today could push yields back toward 4.106 support. That would in turn keep Dollar under pressure.

                      Though, firm break of 61.8% retracement of 3.603 to 4.809 at 4.063 is not anticipated for now, at least until the tariff picture is cleared or there are more signs of recession in the US. On the upside, any rebound should be limited by 55 D EMA.

                      BoJ holds rates, flags exchange rate as key inflation factor

                        BoJ kept its uncollateralized overnight call rate unchanged at around 0.50%, as widely expected.

                        In its statement, BoJ noted that growth is expected to remain above potential, while inflation progress remains on track toward its 2% target. However, policymakers flagged high levels of uncertainty, particularly citing global trade tensions and policy shifts in major economies as key risks.

                        A notable shift in BoJ’s tone was its heightened focus on exchange rate movements as a key factor influencing inflation. The central bank acknowledged that with firms increasingly raising wages and prices, exchange rate developments are, compared to the past, “more likely to affect prices”.

                        This suggests that further depreciation in Yen could accelerate price increases, and influence future monetary policy decisions.

                        Full BoJ statement here.

                        Japan’s export rises 11.4% yoy in Feb, up for fifth straight month

                          Japan’s exports surged 11.4% yoy to JPY 9,191B in February, marking the fifth consecutive month of growth, driven by strong demand from both the US and China. Exports to the US rose 10.5% yoy, while shipments to China saw an even stronger 14.1% yoy increase.

                          Meanwhile, imports declined by -0.7% yoy, marking their first drop in three months, as demand for crude oil and coal weakened. This shift in trade dynamics helped Japan return to a trade surplus of JPY 584.5B, the first positive balance in two months.

                          On a seasonally adjusted basis, exports rose 4.0% mom to JPY 9,688B, while imports fell -4.1% mom to JPY 9,505B, leading to a JPY 182B surplus.

                          Canada’s CPI surges to 2.6%, growing chance for BoC pause at next meeting

                            Canada’s CPI jumped sharply from 1.9% yoy to 2.6% yoy in February, exceeding market expectations of 2.1%. This marks the first time in seven months that inflation has risen above the 2% mid-point of BoC’s target range.

                            A key driver of the surge was the expiration of a sales tax break in mid-February, which added to an already broad-based increase in prices. Without the tax impact, inflation would have hit 3.0%. On a monthly basis, CPI rose by 1.1% mom.

                            A closer look at the CPI basket shows widespread price increases across multiple categories. Food prices rose 1.3% yoy, while clothing and footwear climbed 1.4% yoy. Transportation costs surged 3.0% yoy, and shelter costs remained significantly elevated, rising 4.2% yoy.

                            Core inflation measures also pointed to underlying price pressures. CPI median rose from 2.7% yoy to 2.9% yoy, above expectation of 2.7% yoy. CPI Trimmed rose from 2.7% yoy to 2.9% yoy, above expectation of 2.8% yoy. CPI Common also rose from 2.2% yoy to 2.5% yoy, above expectation of 2.2% yoy.

                            With inflation climbing back above the BoC’s 2% target, speculation about another near-term rate cut has diminished. Unless major economic indicators such as GDP and unemployment show significant signs of deterioration, the central bank would probably pause the easing cycle at its next meeting.

                            Full Canada CPI release here.

                            German ZEW economic sentiment surges to 51.6 on fiscal optimism

                              Germany’s ZEW Economic Sentiment Index surged from 26.0 to 51.6 in March, exceeding expectations of 48.1. However, the Current Situation Index only saw a marginal improvement, rising from -88.5 to -87.6, well below the forecast of -80.5.

                              Similarly, in the Eurozone, economic sentiment rose from 24.2 to 39.8, though it missed expectations of 43.6. Current Situation Index barely moved, edging up to -45.2.

                              ZEW President Achim Wambach attributed the sharp improvement in economic expectations to positive signals regarding German fiscal policy, particularly the agreement on a multi-billion-euro financial package for the federal budget.

                              This stimulus plan has boosted optimism for key industrial sectors, including metal and steel manufacturing and mechanical engineering, which have been struggling with weak demand and global trade uncertainty.

                              Another supportive factor for economic optimism has been ECB’s ongoing monetary easing.

                              Full German ZEW release here.

                              ECB’s Rehn flags growth risks from tariff uncertainty, stays cautious on rate Cuts

                                Finnish ECB Governing Council member Olli Rehn acknowledged that US. tariffs and increased uncertainty are “already having adverse effects” on the Eurozone’s economic outlook, with immediate and near-term growth prospects deteriorating.

                                However, he pointed out that one offsetting factor could be higher defense spending across Europe, which is expected to provide some support to GDP growth in the medium term.

                                Rehn took a cautious stance on further ECB rate cuts, refusing to commit to any specific policy actions given the uncertainty surrounding the economic outlook.

                                While inflation in the Eurozone is stabilizing around the 2% target, he noted that risks are “two-sided.” Despite his cautious tone, Rehn pointed to the ECB’s latest projections, which include several more rate cuts this year if the economy and inflation follow the baseline scenario.

                                SECO lowers Swiss growth outlook, underperformance to continue fro two more years

                                  Switzerland’s State Secretariat for Economic Affairs has slightly lowered its growth projections for the economy, reflecting ongoing global trade tensions and economic uncertainty.

                                  The latest forecast now sees GDP growth at 1.4% in 2025 and 1.6% in 2026, down from the previous estimates of 1.5% and 1.7%, respectively. This means the Swiss economy will likely continue expanding at a pace below its historical average of 1.8%, extending a period of subdued economic momentum for at least two more years.

                                  SECO emphasized that while the base scenario assumes no full-blown global trade war, some negative effects from current trade frictions are still expected, adding pressure on both investment and economic activity.

                                  According to SECO, a negative trade scenario—where international economic activity weakens further—would “significantly impact Swiss exports and domestic economic activity”. On the other hand, an upside scenario exists, particularly if Germany successfully implements its massive fiscal package.

                                  However, for now, SECO believes “downside risks to the economy currently outweigh upside potential”. Also Swiss Franc’s could face upward pressure if downside risks materialize.

                                  Full SECO forecasts here.

                                  Gold extends record run above 3000 on geopolitical and trade risks

                                    Gold surged further above the 3000 psychological level today, extending its record-breaking rally as geopolitical uncertainty, trade tensions, and global monetary easing continue to fuel demand.

                                    Trade tensions remain front and center with investors are piling into the precious metal ahead of the April 2 deadline, when reciprocal and sectoral tariffs will take effect on US trading partners. US President Donald Trump reinforced his stance, declaring that the new tariffs would mark “liberation day” for the US, with broader reciprocal tariffs and sector-specific duties, particularly on steel and aluminum used in auto production.

                                    Meanwhile, attention is also on Trump’s call with Russian President Vladimir Putin today, where discussions will reportedly cover territorial issues and energy infrastructure, likely including Ukraine’s Zaporizhzhia nuclear plant. Any escalation or breakthrough in these discussions could have broader implications for markets,

                                    Technically, Gold’s up trend remains on track to 61.8% projection of 2584.24 to 2956.09 from 2832.41 at 3062.21. which is close to the medium-term channel resistance.

                                    Rejection by the resistance zone, followed by break of 2956.09 resistance turned support will risk a correction back towards 55 D EMA (now at 2841.83) first.

                                    However, strong break above the channel resistance would prompt acceleration in Gold’s uptrend. In such a scenario, gold could quickly reach 100% projection at 3204.26.

                                    RBA’s Hunter cautious on further rate cuts, Treasurer warns of trade war’s indirect impacts

                                      RBA Chief Economist and Assistant Governor Sarah Hunter reinforced the central bank’s cautious stance on further rate cuts. She emphasized in a speech today that while the February cut was deemed an appropriate time to “take some restrictiveness away”, the Board were “more cautious than the market about prospects for further easing”.

                                      Hunter highlighted that US policy settings and their impact on the global economy as “one of the things we are focused on right now”.

                                      She added that policy decisions are always made in uncertain environments, where the baseline forecast is just one of many possible scenarios rather than a strict roadmap for future moves. The link between economic forecasts and rate decisions is “not mechanical”.

                                      Separately, Australian Treasurer Jim Chalmers acknowledged that the direct impact of US tariffs on Australia is “concerning, but manageable”. But he warned that the larger risk lies in a broader global trade war. He described the current environment as a “new world of uncertainty”, where the spillover effects from rising trade tensions could have far-reaching consequences for Australia’s economy.

                                      Full speech of RBA’s Hunter here.

                                      US retail sales rises 0.2% mom in Feb, ex-auto sales up 0.3% mom

                                        US retail sales grew 0.2% mom to USD 722.7B in February, well below expectation of 0.7% mom. Ex-auto sales rose 0.3% mom to USD 584.7B , below expectation of 0.5% mom.

                                        Ex-gasoline sales rose 0.3% mom. to USD 669.9B. Ex-auto& gasoline sales rose 0.5% mom to USD 627.2B.

                                        Total sales for December through February period was up 3.8% from the same period a year ago.

                                        Full US retail sales release here.

                                        OECD trims global growth outlook amid trade tensions and policy uncertainty

                                          OECD forecasts a slight slowdown in global economic growth over the next two years, reflecting the effects of escalating trade tensions and heightened policy uncertainty. In its Interim Economic Outlook, OECD projects global growth will ease from 3.2% in 2024 to 3.1% in 2025, and further to 3.0% in 2026. These numbers represent a downgrade from its previous forecasts, which projected 3.3% growth for both this year and next.

                                          Among advanced economies, the US is expected to lose momentum, with growth forecast at 2.2% in 2025 before cooling to 1.6% in 2026—down from earlier estimates of 2.4% and 2.1%.

                                          Meanwhile, Eurozone is projected to increase from 1.0% growth this year to 1.2% in 2026. Although this marks an improvement relative to 2024’s mild performance, it still lags the OECD’s previous forecasts of 1.3% and 1.5%.

                                          The imposition of higher tariffs is expected to weigh particularly heavily on North American economies beyond the US. Canada’s growth rate is set to slow to 0.7% this year and next, well below the 2% previously estimated.

                                          Mexico would be hit hardest, with its economy forecast to contract by -1.3% in 2025 and a further -0.6% the following year—reversing prior expectations for moderate growth.

                                          By contrast, China appears relatively well-positioned to manage the fallout from higher tariffs. OECD anticipates that targeted government stimulus will support growth to 4.8% in 2025—slightly above the previous forecast of 4.7%—before moderating to 4.4% in 2026.

                                          OECD Secretary-General Mathias Cormann warned that signs of weakness are emerging in the global economy, primarily due to “heightened policy uncertainty.” He added that “increasing trade restrictions” will raise costs for both production and consumption.

                                          Full OECD release here.