Central banks respond with caution
Week of May 5–9
Here’s a summary of the most relevant events that shaped the markets this week:
The Federal Reserve kept its benchmark interest rate unchanged at 4.25%–4.5%, as expected. However, the message was clear: uncertainty is rising. Jerome Powell warned that tariffs could lead to higher long-term inflation and slower economic growth. Meanwhile, President Trump announced a new trade deal with the U.K., though it does not currently include removing tariffs on China.
Key international developments:
- Europe: Germany reported strong trade and industrial data for March. The Bank of England cut its interest rate to 4.25%.
- China: New monetary stimulus measures were introduced, including a rate cut and a reduction in the bank reserve requirement ratio.
- Brazil: The Central Bank raised its benchmark rate to 14.75%—the highest level in two decades—and signaled that further hikes are possible.
- Mexico: April inflation came in at 3.93% year-over-year. Markets continue to expect another rate cut from Banxico, while growth forecasts are being revised downward.
“Uncertainty actually is the friend of the buyer of long-term values” — Warren Buffett
KEY UPCOMING EVENTS
- U.S. Inflation Report – May 13
- U.S. Retail Sales – May 15
Monitor
