BoJ’s Ueda: US Tariffs Could Drive Inflation Higher Before Slowing Growth
Tokyo, March 27 – Bank of Japan (BoJ) Governor Kazuo Ueda expressed concerns on Wednesday that the United States’ recent tariff policies could have mixed economic effects, driving inflation higher in the near term but potentially slowing price growth over the long run by dampening US economic activity.
Speaking to reporters, Ueda emphasized that the impact of tariffs would depend on their scale and scope, warning that heightened trade barriers could significantly alter global trade flows. "Depending on the size of US tariff hikes, it could have a big impact on each country’s trade activity," Ueda noted.
While tariffs often lead to immediate price increases for imported goods, they can also create broader economic headwinds that reduce demand and slow growth over time. Ueda acknowledged this dual effect, stating, “US tariffs are likely to push up inflation in the short term but could weigh on prices longer-term by cooling US economic growth.”
Concerns Over Global Sentiment and Policy Response
Beyond the direct economic impact, Ueda pointed to the potential for tariffs to affect both consumer and business sentiment on a global scale. "Another big question is how US tariffs could affect household and corporate sentiment when gauging their impact on the global economy," he said.
Heightened trade tensions between major economies could lead to increased market volatility, particularly if businesses and investors adjust their strategies in response to shifting trade policies. Ueda noted that central banks and finance officials will be closely monitoring these developments and may discuss them at upcoming international meetings.
“We will likely have more information on US tariff policy when finance leaders gather for the IMF/G20 meetings later this month, so policymakers will likely share views and debate approaches,” Ueda added, highlighting the importance of global coordination in navigating potential economic disruptions.
Market Reaction
Following Ueda’s remarks, the Japanese yen edged lower against the US dollar, with the USD/JPY pair rising 0.19% to 149.88 at the time of reporting. Investors remain cautious as they await further clarity on US trade policies and their potential implications for global markets.
As economic policymakers prepare to meet, markets will be watching closely for any indications of coordinated responses or shifts in monetary strategy in reaction to evolving trade dynamics.
AUD/USD Holds Steady Below 0.6300 as Markets Eye Trump’s Tariff Announcement
Sydney, April 3 – The Australian dollar (AUD) traded flat against the US dollar (USD) early Wednesday, with AUD/USD hovering around 0.6275 as markets remained cautious ahead of a key announcement from US President Donald Trump on reciprocal tariffs. The pair saw limited movement following the Reserve Bank of Australia’s (RBA) decision to keep interest rates on hold and as investors awaited the release of the US ADP Employment Change data later in the day.
Trump’s Tariff Plans Could Weigh on AUD/USD
Investor sentiment remains fragile as Trump prepares to introduce reciprocal tariffs on US trading partners, a move that could include additional levies on Chinese imports. Since taking office in January, Trump has imposed a 20% tariff on all Chinese goods, citing Beijing’s failure to curb the flow of chemicals used in fentanyl production.
China, as Australia’s largest trading partner, plays a crucial role in influencing the Australian dollar. Any escalation in trade tensions between the US and China could pressure the Aussie, as concerns mount over potential disruptions to global trade flows.
RBA Maintains Cautious Stance on Interest Rates
The Reserve Bank of Australia (RBA) opted to keep its Official Cash Rate (OCR) at 4.10% during its April policy meeting on Tuesday. The central bank’s policy statement reflected ongoing concerns over inflation trends, with policymakers adopting a cautious approach to ensure inflation continues to moderate.
RBA Governor Michele Bullock reinforced this stance, noting that the board remains careful not to act prematurely on policy adjustments. She clarified that the RBA did not discuss a rate cut and has not yet decided on any potential moves for May, signaling a data-dependent approach to future monetary policy decisions.
Chinese Economic Data Offers Limited Support to AUD
Despite trade concerns, the Aussie found some support from upbeat Chinese economic data. China’s Caixin Manufacturing PMI rose to 51.2 in March, improving from 50.8 in February and surpassing expectations of 51.1. A reading above 50 indicates expansion in the manufacturing sector, reinforcing optimism about China’s economic resilience and its potential spillover benefits for Australian exports.
Market Outlook for AUD/USD
Looking ahead, traders will closely monitor Trump’s tariff announcement and the US ADP Employment Change report for fresh catalysts. A strong US jobs report could fuel speculation about the Federal Reserve’s interest rate trajectory, potentially strengthening the USD and putting pressure on AUD/USD.
For now, AUD/USD remains trapped below the key 0.6300 resistance level, with trade and monetary policy developments likely to dictate its next move.
WTI Crude Oil Holds Below $71 as Markets Await Trump’s Tariff Announcement
New York, April 3 – West Texas Intermediate (WTI) crude oil prices edged higher on Wednesday, reaching $70.95 per barrel in early Asian trading. However, gains remain capped below the $71.00 resistance level as traders brace for potential volatility ahead of US President Donald Trump’s announcement of new reciprocal tariffs.
Trump’s Tariff Threats Drive Geopolitical Uncertainty
Investor sentiment in the oil market remains fragile following Trump’s recent threats to impose tariffs on Russian oil buyers. The US President stated on Sunday that he was "pissed off" at Russian President Vladimir Putin and would introduce secondary tariffs ranging from 25% to 50% on any country purchasing oil from Moscow. Trump also issued a similar warning to Iran, threatening military action and economic penalties if Tehran fails to negotiate a nuclear agreement with Washington.
These geopolitical tensions have heightened fears of potential supply disruptions, offering some support to crude prices. However, Trump’s upcoming reciprocal tariffs—which could impose trade barriers on multiple nations—are also seen as a potential dampener on global economic growth, which in turn could curb oil demand.
US Crude Inventories Continue to Climb
Adding to the complex market dynamics, the latest American Petroleum Institute (API) data showed that US crude oil stockpiles surged by 6.037 million barrels for the week ending March 28. This marked a sharp reversal from the 4.6 million barrel drawdown recorded in the previous week.
So far this year, crude oil inventories in the US have risen by nearly 23 million barrels, according to API data calculations by OilPrice.com. The ongoing increase in stockpiles signals ample supply in the US market, which may weigh on WTI prices in the near term.
OPEC+ Meeting in Focus as Market Eyes Future Supply Levels
Oil traders are now shifting their attention to the OPEC+ ministerial committee meeting scheduled for Saturday, where policymakers will review production levels. According to Reuters sources, OPEC+ is planning a 135,000-barrel-per-day production increase for May, following a similar supply adjustment in April.
Market Outlook: Cautious Trading Expected
WTI crude oil prices remain trapped below the $71.00 mark, as supply concerns from Trump’s geopolitical threats counterbalance economic uncertainty stemming from trade tariffs and rising US stockpiles.
With Trump’s tariff announcement looming and the OPEC+ decision on the horizon, oil traders will likely remain cautious, awaiting fresh market signals before making decisive moves.
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