The economic convulsions wrought by Donald Trump’s volatile tariff announcements and swingeing public sector job cuts are threatening hopes of a soft landing after years of inflation, the Bank of International Settlements (BIS) has said.

The BIS, known widely as the ‘central bank of central banks’, warned in its latest global report that while it expects the world’s major economies to avoid recession this year, Donald Trump’s tariffs have bred unusually high market volatility.

Central bankers across developed economies have been holding onto hopes that they have been able to orchestrate what is known as a ‘soft landing’, whereby a period of embedded inflation ends without being followed by a recession.

Governor of the Bank of England Andrew Bailey and his American counterpart Jay Powell have both previously declared that such a landing across both the US and UK economies were in sight.

But speaking alongside the BIS’s quarterly outlook, Frank Smets, deputy head of monetary policy at the BIS, said Trump’s capricious approach to trade has jeopardised those hopes.

“Policy uncertainty on tariffs, [US] fiscal policy, immigration and regulation… work like a negative demand shock. They would have negative effects on spending, investment and we see some signs of that.”

“If tariffs are implemented – and some have been – then the negative demand shocks can become supply shocks and give rise to inflationary pressure,” he added.

Donald Trump’s first two months in office have been characterised by the US applying sudden tariffs on some of its largest trading partners.