(April 14): The first Group of Seven (G7) monetary policy decisions since President Donald Trump’s trade war unleashed global market turmoil may prompt diverging responses from either side of the Atlantic.

While Bank of Canada officials on Wednesday could keep borrowing costs on hold to guard against the potential inflationary impact of an ongoing tariff battle with the US, the European Central Bank (ECB) is now widely anticipated to reduce interest rates the following day.

The next Federal Reserve (Fed) decision isn’t until May 7, so this week’s meetings put the onus on policymakers in Frankfurt and Ottawa to soothe investors while assessing the economic fallout from Trump’s action.

The US president has paused many of the harshest elements of his promised tariffs — with actions against China the exception — but market volatility and pervasive uncertainty may inflict damage too. ECB president Christine Lagarde hinted at those risks last Friday, saying officials are monitoring the situation and have tools available, and that price stability and financial stability go hand-in-hand.

This is the second time in just over two years that she and colleagues find themselves puzzling over a rate decision in the wake of turmoil emanating from the US, but before Fed policymakers met. After the collapse of Silicon Valley Bank prompted market ructions in 2023, the ECB opted not to blink, and delivered a promised half-point hike.

On this occasion, the ECB’s decision may be more straightforward. With tariffs likely to hit the economy but the European Union holding off for now on inflationary countermeasures, officials are widely expected to cut their rate by a quarter point.

Canada has more of a trade-off to consider. While Trump’s tariffs are already hurting business investment and consumer spending, inflation expectations are spiking. Data on consumer prices out on Tuesday may prove pivotal for their judgment.

Elsewhere, rate decisions from South Korea to Türkiye, Chinese gross domestic product data, and inflation reports from the UK to Japan are among the highlights.

Against a backdrop of rising Treasury yields, weaker dollar and slumping stocks tied to US trade policy, investors will be seeking clues from Fed policymakers on their appetite for lower interest rates.

Fed chair Jerome Powell will offer his assessment of the economy in a speech on Wednesday before the Economic Club of Chicago. The same day, regional Fed presidents Jeff Schmid and Lorie Logan will discuss the economy and banking.

On Monday, Fed governor Christopher Waller speaks on the economic outlook, and Fed governor Lisa Cook will offer remarks on Tuesday.

Speaking on Sunday, Minneapolis Fed president Neel Kashkari signaled confidence that markets will remain orderly as investors sort through Trump’s shifting trade policies and said the central bank must stay focused on keeping inflation expectations anchored.

Meanwhile, March retail sales on Wednesday are projected to show a solid increase as consumers raced to beat tariffs on imported motor vehicles and auto parts. The median projection in a Bloomberg survey of economists calls for a 1.4% jump in sales, the largest monthly increase since the start of 2023.

Industry data show vehicle sales increased to an annualised 17.77 million pace, the strongest month for car dealers in nearly four years, according to Ward’s Intelligence. Trump raised duties on imported autos and parts to 25%, which went into effect on April 3.

Excluding vehicles, gasoline, building materials and food services — the so-called control-group sales, which closely track goods spending within the gross domestic product report — sales are seen posting a solid gain to cap an otherwise tepid quarter for the consumer.

Also on Wednesday, industrial production data will probably show a 0.2% decline in March as moderate temperatures limited utility output and manufacturing cooled. Government figures on Thursday are forecast to show a decline in housing starts as builders concentrated on reducing new-home inventory.

Meanhwile, Trump’s administration exempted smartphones, laptop computers, hard drives and computer processors and memory chips as well as flat-screen displays from its so-called reciprocal tariffs. Those popular consumer electronics items generally aren’t made in the US. That will be welcome news to consumers, some of whom rushed to buy new iPhones and other devices amid fears that the tariffs would send prices soaring.

Uploaded by Siow Chen Ming