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The stock market is used to the wait-and-see approach from the Fed. But now the president is riffing on that game plan too.
Their deliveries contrast sharply. Federal Reserve Chair Jerome Powell is explicit. We can wait and are in a position to do so. And as the outlook evolves and the tariff landscape takes shape, the central bank can take action with its powder dry.
Trump is opaque. When a sympathetic business journalist recently asked him to offer clarity to the market, he scoffed. The stock market’s tanking? So what. Another day, another tariff. But the similarities between the two leaders come in the form of detachment from Wall Street panic and a longer-term view.
Trump isn’t exactly known for his patience. But on the issue of levies, he’s been both unyielding in thought and transactional in practice. Mexico and Canada received some reprieve, but Europe is under new threats. And the dizzying back-and-forth has created a conceptual traffic jam of economic paralysis that has reverberated through consumer sentiment.
Trump is daring heads of state to respond, Powell is waiting for Trump to make up his mind and data to change, and Wall Street is looking for the White House and the Fed to get off the fence.
If Trump’s distinctive tariff policy is a time bomb, the explosion of them taking effect isn’t the only dangerous part. It’s the ticking, the randomness of the timer, the affliction caused by the endless anticipation. Businesses may dislike tariffs. But what they really hate is uncertainty.
Meanwhile, the Fed has to make sense of fluctuating pricing pressures.
On Thursday, new inflation data showed price increases slowed in February — but economists saw warning signs that the central bank may interpret as reasons to continue waiting.
Read more: From $5 eggs to insurance premiums, here’s where prices are rising
“Thursday’s inflation data is backward looking, and the real worry is the inflationary effects that may come from tariffs, which is a wildcard for markets and the Federal Reserve,” said Paul Stanley, chief investment officer at Granite Bay Wealth Management. “It’s too early to tell what tariffs mean for inflation because we don’t know yet the extent of the tariffs or if the administration will end up reversing course and adopting a more dovish tariff policy.”
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