Uncertainty is back at center stage—and the Federal Reserve knows it.
As new U.S. tariffs ripple through global markets, Fed Chair Jerome Powell has made it clear: the central bank is watching closely, but not panicking. The recently introduced trade measures are “larger than expected,” Powell admitted, with the potential to push inflation higher and slow economic growth. Behind the scenes, Fed staff are already modeling scenarios that assume full retaliation from trading partners—an early sign that policymakers are preparing for turbulence.
Still, Powell’s tone remains measured. He emphasized that while price increases may occur in the short term, they’re likely to be transitory unless deeper structural shifts take hold. With long-term inflation expectations anchored and the labor market relatively balanced, the Fed is holding rates steady for now, adopting a flexible “wait-and-see” stance amid growing uncertainty.
Message: in a world of shifting trade dynamics and fragile sentiment, the Fed is staying calm, data-driven, and ready to respond—but only when the time is right.