The Federal Reserve is approaching economic uncertainty with caution, expressing concerns about the impact of new tariffs and the heightened market volatility witnessed in recent months. Key indicators suggest firms are preparing to pass on tariff-related cost increases to consumers through price adjustments. The Fed’s cautious approach reflects a growing risk to the US financial system’s stability as investors appear hesitant about US assets amid this economic landscape marked by rising borrowing costs, a depreciating dollar, and falling stock prices. Economists highlight that these factors may signal an investor shift away from US assets. While businesses are prepared to transfer tariff-related expenses onto consumers, the Fed remains cautious in adjusting interest rates due to the prevailing economic uncertainty.