Bank for International Settlements Warns of Economic Risks Amid U.S. Policy Uncertainties

Bank for International Settlements Warns of Economic Risks Amid U.S. Policy Uncertainties

The Bank for International Settlements (BIS) has issued a cautionary statement regarding potential economic risks stemming from uncertainties associated with U.S. President Donald Trump’s trade policies and deregulation initiatives. Agustín Carstens, the BIS General Manager, highlighted concerns over the impact of fiscal, regulatory, and immigration policies, as well as broader geopolitical issues. He emphasized that such pervasive policy uncertainties could adversely affect central banks by hindering economic growth, as businesses may delay investments and households might postpone significant purchases. Financial markets are also anticipated to experience heightened volatility, driven by substantial currency and asset price fluctuations. Carstens noted that some asset price movements, particularly currency depreciations, could be inflationary, urging central banks to prioritize controlling inflation. The BIS also pointed to the dangers of loose fiscal policies and escalating debt levels, which could destabilize financial markets. Additionally, the divergence between U.S. interest rates and those of other major economies could lead to greater variability in central bank policies, influencing global financial conditions.