Uncertainty the theme of European Central Bank conference

Top central bank governors on Tuesday spoke frequently of uncertainty in the global economy during a panel discussion at the European Central Bank’s annual forum in Portugal. The officials’ comments often focused on how recent U.S. trade policies, such as reciprocal tariffs, shook up their projections for the global economy. The speakers included U.S. Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde, as well as bank governors from South Korea, Britain, and Japan.

The event came the day after U.S. President Donald Trump blasted Powell on social media for choosing not to lower interest rates. Trump said Powell had cost the United States trillions in interest. The Federal Reserve rates have remained at 4.25% to 4.50% since December 2024, according to Forbes. Trump said rates should be lowered to at least 1%, less than Europe’s rate.

At the Tuesday forum, Powell said he planned to cut rates in the fall—but also said he would have done so earlier if not for the uncertainty introduced by Trump’s tariffs. Tariffs hadn’t affected inflation yet, and he was waiting to see if they did so, he said. Core inflation was on Tuesday estimated at 2.7%, not far from the Federal Reserve’s target of 2%, though it might rise slightly over the summer, Powell said.

What did other bank leaders say about the tariffs? Bank of Korea Governor Rhee Chang-yong said that the United States’ 25% reciprocal tariff on his country was affecting auto, steel, and aluminum supply chains, but hadn’t driven up inflation. Kazuo Ueda, head of the Bank of Japan, said his country was negotiating a trade deal with the United States.

Lagarde of the European bank said the tariffs, as well as volatile situations like the Russia-Ukraine war, were pushing Europe to become more autonomous and self-sufficient. Andrew Bailey, governor of the Bank of England, expressed concerns that a perceived lack of openness in the global economy would lead to fragmentation of markets. His country recently hammered out a trade deal with the United States.

What did Powell say about Trump’s sharp personal critiques of him? When asked about the comments during the forum, Powell said he was completely focused on doing the job Congress gave him—ensuring employment and economic stability. The room of forum attendees broke into spontaneous applause after he made that statement. Powell also said the Federal Reserve should pursue its goal in an apolitical way. Its monetary policy should give lawmakers a good economic environment in which to make political decisions, he said.

Powell’s term as Federal Reserve chairman expires in about 10 months. He didn’t say whether he would stay on as a governor of the bank after his chairman term expires.

Dig deeper: Read my report on Canada’s decision to scrap its digital services tax to reopen trade negotiations with the United States.