Investors are taking some comfort from the US Federal Reserve’s wait-and-see approach, after being rattled by the tariff-related turmoil that has threatened markets and the economy.
Since taking office as US President, Donald Trump has rattled the stock market and dented consumer confidence.
Markets are balancing hopes for a pro-business agenda, deregulation and lower taxes against concerns about a trade war and the potential for a recession.
At a policy meeting on Wednesday, Fed policymakers emphasized their cautious stance by keeping interest rates unchanged, while acknowledging rising risks to growth and inflation.
However, the US central bank has yet to price in a sustained surge in inflation or a significant economic impact from Trump’s trade policies.
Chairman Jerome Powell stressed that uncertainty remains high and the central bank is waiting for better clarity, a new message for markets.
Josh Emanuel, Chief Investment Officer at Wilshire, said the Fed’s decision was in line with economic risks.
He stressed that this period of extraordinary uncertainty is clearly acknowledged, and it is inappropriate for the Fed to predict significant policy changes without clarity on the administration's policy direction.
