Global economic growth will slow amid Trump tariffs, IMF warns – as it happened (2025)

Donald Trump appears to have been paying unusually close attention to the European Central Bank’s monetary policy: his first public action this morning was to use their example to attack US Federal Reserve chair Jerome Powell for not cutting interest rates.

The end of Jerome Powell’s tenure as chair “cannot come fast enough”, Trump said. “Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now.”

Trump is perhaps not very likely to have listened to the ECB’s president, Christine Lagarde, explaining the reasons why it has – unlike the Fed – cut interest rates.

Lagarde said on Thursday that “the economic outlook is clouded by exceptional uncertainty” because of Trump’s tariffs, which constitute a negative demand shock.

Lagarde was speaking after cutting the ECB’s main deposit rate by 25 basis points to 2.25% – the seventh reduction within the last year – partly in response to the tariff turmoil.

The ECB president underlined the uncertainty facing forecasters during Trump’s trade war. However, the head of the International Monetary Fund on Thursday said that it has so far predicted the world will avoid a Trump-induced recession, although it will still suffer much slower growth.

Kristalina Georgieva said economic “resilience is being tested again – by the reboot of the global trading system”.

Trade tensions are like a pot that was bubbling for a long time and is now boiling over. To a large extent, what we see is the result of an erosion of trust – trust in the international system, and trust between countries.

You can continue to follow our live coverage from around the world:

In the US, an IRS decision on Harvard’s tax-exempt status is expected soon amid concern over Trump interference

In UK politics, Kemi Badenoch calls for broader review of equality and gender recognition laws

In our Europe coverage, Emmanuel Macron meets Marco Rubio and Steve Witkoff for talks on Ukraine

That’s all from the business live blog this week. Thanks for reading, and happy Easter. JJ

The International Monetary Fund (IMF) has said that it expects much slower global growth – but not a recession – because of trade tensions amid Donald Trump’s tariff war.

Kristalina Georgieva, the IMF’s managing director, said that the latest world economic outlook forecasts will include “notable markdowns, but not recession”, in a speech in Washington before its annual meeting starting on Monday.

The forecasts will be closely scrutinised for judgments of Trump’s economic policy, after a fortnight of financial market chaos since his “liberation day” tariffs. Stock markets plunged after Trump raised tariffs on all goods imports, only to recover somewhat when he imposed a 90-day “pause” when turbulence spread to the bond market.

The deep uncertainty over Trump’s plans have made it difficult for economists. However, unlike European Central Bank president Christine Lagarde, who refused to say how tariffs would affect inflation, Georgieva said that the IMF has raised inflation forecasts for some countries.

Georgieva said economic “resilience is being tested again – by the reboot of the global trading system”.

Trade tensions are like a pot that was bubbling for a long time and is now boiling over. To a large extent, what we see is the result of an erosion of trust – trust in the international system, and trust between countries.

Across the Atlantic in Wall Street, it is a mixed bag in the early trades (despite Donald Trump’s grousing about the Federal Reserve not favouring him with interest rate cuts).

• S&P 500 UP 20.18 POINTS, OR 0.38%, AT 5,295.88

• DOW JONES DOWN 484.36 POINTS, OR 1.22%, AT 39,185.03

• NASDAQ UP 88.96 POINTS, OR 0.55%, AT 16,396.12

The ECB is about to end the press conference … but Christine Lagarde breaks in to draw attention to something in the ECB’s statements.

It’s not quite an Easter egg, but the statement references three projects to try to revitalise the European economy. Lagarde suggests that the ECB is thinking about how it can use the present moment to improve the institutional functioning of Europe to help growth.

This is a moment for Europe to not only be solid on its monetary policy … but for Europeans all together to focus on what changes can take place.

And with that, the press conference ends.

Christine Lagarde says she cannot say if the world has reached peak uncertainty. She says:

We meet every six weeks. Think of the number of changes that have taken place in the last six weeks.

Asked about the exchange rate, she says the ECB is not targeting a particular exchange rate.

Christine Lagarde says the ECB will demonstrate “effectiveness and agility” in responding to monetary policy.

Asked about what she would say about Trump’s trade war, Lagarde says she will not characterise it. She says:

It will have downside consequences. The consequences will differ depending on which side of the world you stand.

‘Stablecoins’ are in a ‘very separate category’ to crypto, Christine Lagarde says, when asked about US efforts to promote them.

Stablecoins are like cryptocurrencies, but pegged to an existing asset, meaning they are usually much less volatile and risky.

The ECB has referred to the digital euro in its monetary policy statement for the first time, a statement of its intent to go forward with it, Lagarde says.

Christine Lagarde says: “I have a lot of respect for my esteemed colleague and friend, Jerome Powell.”

The relationship will continue in an “undeterred and unchanged manner”, she says, despite Donald Trump’s efforts to pressure Powell into cutting interest rates.

Christine Lagarde says Europe is facing tariffs that have risen from 3% to about 13% on goods exported to the US.

That is a “negative demand shock”. Some uncertainty will remain for several months, Lagarde says.

There will be a negative impact on growth, possibly.

A few months ago there were a number of governors who would have voted for a “skip” – not cutting interest rates at this meeting – and others who might have voted for 50 basis points, Christine Lagarde says.

But it was unanimous in favour of 25 basis points, she says.

Christine Lagarde says we should not read anything into the removal of a sentence about how restrictive policy is.

It’s somewhat technical, but essentially she says that judgment relies on working out the neutral interest rate, at which monetary policy is neither tight or loose. But working out the neutral rate does not work when the economy is hit by a shock. She says:

Anybody in this room who thinks we are in a shock-free world, would I suggest raise their hands or have their head examined.

It is more important than ever to be data-dependent during a period of uncertainty, she says.

Tariffs are a negative demand shock, but there are “diverging views” on how the tariffs will play out for inflation, Christine Lagarde says.

The net impact on inflation will become clearer over the course of time, she says – a fairly non-committal answer on a crucial judgment for the ECB.

The decision to cut interest rates by 25 basis points (0.25 percentage points) was “unanimous” – although the ECB’s governing council did consider other options, Lagarde says.

There was nobody arguing in favour of a bigger rate cut, Lagarde says.

Banks are becoming more concerned about the economic risks faced by their customers, Christine Lagarde says.

The ECB is determined to ensure that inflation falls “sustainably” to 2%, but it will remain “data-dependent”, Lagarde says. Now on to questions.

Christine Lagarde suggests that trade tensions could push inflation up or down.

Tariffs add to costs, but trade diversion could also drive down prices, she warns.

The major escalation in trade tensions may drag down growth, Lagarde says.

It may make firms less willing to invest and consume, she adds.

However, the increase in defence and infrastructure spending could add to growth.

Lagarde says most economic indicators are pointing to return of underlying inflation to the ECB’s 2% target.

Christine Lagarde says the economic outlook is clouded by “exceptional uncertainty”, citing “new barriers to trade” amid Donald Trump’s trade war.

Consumers may hold back spending as they become more cautious, she says.

The economy is likely to have grown in the first quarter of the year, and manufacturing showed signs of stabilisation.