April 2025: Monthly market update

Markets under pressure. 

Global stock markets came under pressure in March amid growing concerns about the economic impact of President Donald Trump’s tariffs. US stocks dropped sharply and bond yields (which means bond prices rose) fell after Trump refused to rule out the possibility that his policies could trigger a recession. Long-threatened tariffs have pushed the country into a trade war, while shifting plans for new levies added to the uncertainty. 

Stock market falls, trade tensions and weakening consumer sentiment have reignited fears of a US downturn. The US central bank, the Federal Reserve (Fed), cut its growth forecast, warning that Trump’s tariffs were driving up prices. European bond yields rose on news of increased defence spending, which raised expectations of higher government borrowing and inflation. UK shares also dropped amid uncertainty over US trade policy. 

The Fed held interest rates steady but signalled cuts are likely later this year, keeping its key borrowing rate in a range of 4.25% to 4.5%. US inflation came in at 2.8% in February, down from 3% in January. The US labour market has been sluggish, with 151,000 jobs added in February and unemployment rising to 4.1%. Consumer sentiment tumbled in March as long-term inflation expectations reached a 32-year high

EU announces retaliatory tariffs. 

After Trump imposed 25% tariffs on steel and aluminium imports, the EU responded with duties on €26 billion worth of American goods. The European Central Bank (ECB) cut its deposit rate by a quarter-point to 2.5% and lowered growth forecasts for this year and next amid tariff uncertainty. 

Euro area inflation fell to 2.3% in February, the first drop in four months. Unemployment remains at a record low, though analysts expect it to rise in the months ahead.

Figure 1: Consumer prices 

Inflation across most major economies is hovering just above the 2% target favoured by their central banks.