### I. Global Central Banks Take a Collective Pause
- **Federal Reserve**: Held rates steady for the third consecutive time at 3.50%–3.75%. The vote showed the largest dissent since 1992 (8–4). Powell will stay on as Governor after stepping down as Chair. Markets now expect the next move to be a rate hike (Q3 2027).
- **Bank of Japan**: Kept rates at 0.75% with a 6–3 vote – the deepest split under Governor Ueda. Probability of a June rate hike has risen to 65%.
- **European Central Bank**: Left its three key rates unchanged, acknowledging rising stagflation pressures.
### II. IMF Lowers Global Growth Forecast
- 2026 global growth revised down from 3.3% to 3.1%.
- Warns that under a severe adverse scenario, the global economy would edge toward recession (~2% growth, ~6% inflation).
### III. Geoeconomic Developments
- **China-EU trade**: Achieved a "soft landing" on EV import tariffs, avoiding a 25% punitive duty. However, the EU is simultaneously pushing forward the Industrial Accelerator Act, raising market access barriers.
- **G7**: Ready to tap strategic oil reserves to stabilize markets; building alternative supply chains for critical minerals to reduce dependence on China.
### IV. Market Implications
- Rate cut expectations have largely evaporated. "Higher rates, higher volatility" will be the new normal for years to come.
- Central banks face a stagflation dilemma with no easy way out.
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