Global central banks diverge as tariff risks hamper US Fed.

Big central banks are diverging as White House tariffs threaten to raise U.S. inflation and a dash out of the dollar sparks disinflationary currency strength elsewhere.

The U.S. Federal Reserve is holding rates steady for now, while Switzerland is moving closer to negative rates once again, and Japan remains an outlier with its bias to hike rates.

The Swiss National Bank next meets on June 19 and says it is ready to pull interest rates back into negative territory, from 0.25% currently, to stop the surging Swiss franc hurting the export-heavy economy and raising deflation risks.

But with speculators now betting against the franc after haven demand drove it almost 7% higher against the dollar since early April, the SNB may avoid having to resort to unconventional monetary policies after all.

The Bank of Canada held rates at 2.75% in April after seven consecutive cuts. Its policymakers were evenly split on the need for more easing and Governor Tiff Macklem said global trade uncertainty made forecasting “of little use”.

Traders widely expect the Reserve Bank of New Zealand to cut rates by 25 basis points to 3.25% on May 28 to protect the China-focused economy from trade blows, then to keep cutting for the rest of this year as the strong kiwi dollar helps inflation stay on target.

Source: Financeyahoo