The Federal Reserve (Fed) finds itself in a position of uncertainty, facing rising economic risks while waiting for clearer signals. The Swedish bank Nordea highlights this situation, noting that the Fed is seeking more clarity before making any decisions on interest rate adjustments. This reluctance stems from concerns about trade policy and economic outlook, causing the market to predict a less likely chance of a rate cut at the upcoming June meeting. Although the market has shifted slightly towards a hawkish stance in anticipation of this uncertainty, Nordea believes that the Fed ultimately prioritizes promoting economic growth over addressing temporary inflation spikes. If long-term inflation expectations remain stable and aligned with their target levels, the Fed should be able to overlook the temporary impact on inflation caused by tariffs. However, there’s also a possibility that the short-term economic consequences of tariff uncertainty may exceed current estimates. Yet, for now, the Fed perceives limited economic impact from these measures, while noting positive signs in trade negotiations. Inflation remains stubbornly high and is expected to increase further due to the implementation of tariffs.