Investing.com - The Federal Reserve may need to see signs of U.S. private credit market instability before it is in a state of "fear" that could prompt action from the central bank, according to analysts at Macquarie.

Policymakers have recently suggested that they are waiting for more clarity around the broader economic situation in the wake of erratic tariff measures from U.S. President Donald Trump.

Earlier this month, Trump moved to slap steep reciprocal tariffs on a host of countries, arguing that it was necessary to correct longstanding trade imbalances and increase federal revenues. However, he later announced a partial 90-day pause to the elevated levies on most of these nations, in an apparent response to deep turmoil in both stock and bond markets.

The White House then temporarily halted duties on a range of tech-related products, such as smartphones and computers, largely coming from China. Trump has also floated potentially granting exemptions to car-related imports.

Still, universal 10% tariffs on many countries remain in place, as well as trade taxes on items like steel, aluminum, autos and auto parts.

China was also left out of Trump’s reciprocal tariff delay, ratcheting up a trade spat between the world’s two largest economies. The president has placed a 145% tariff on imports from China, sparking a retaliatory 125% levy from Beijing.

Media reports, meanwhile, have suggested that sector-specific duties on electronic products, semiconductors and pharmaceuticals could soon be implemented. Commerce Secretary Howard Lutnick has said an investigation into these industries that may be a precursor to future tariffs could wrap up "in the next month or two."

Fed Chair Jerome Powell has said there has been a lot "waiting and seeing going on," including by the Fed, against this backdrop.

Powell added that this tactic seemed "like the right thing to do at a time of elevated uncertainty" -- a statement that was interpreted as an indication that the central bank may not rush to slash interest rates should the tariffs spark a broader economic crisis, an action known by many investors as a "Fed put."

Fed Governor Christopher Waller said earlier this month that although the tariffs represent a major shock to the U.S. economy, he expects the duties will have a "transitory" effect on inflation.

In a note to clients, the Macquarie strategists led by Thierry Wizman and Gareth Berry said the Fed may adopt a more dovish policy stance should more indications emerge of private credit market ructions.

"We would expect that these cracks might emerge first among the highly-levered markets, such as the leveraged loan market," they wrote.

 

 

Scott Kanowsky is a Madrid-based journalist covering European corporates, the ECB, and political developments from around the continent.

He comes to Investing.com from NBC News, where he produced segments on everything from Capitol Hill dealmaking to the war in Ukraine for the channel's streaming service. Before that, he spent four years at CNBC's London office, waking up bright and early to cover the biggest breaking business stories for the outlet's morning programs.

He holds a Bachelor's degree in broadcast journalism from the University of Missouri and a Master's degree in financial journalism from City, University of London. 

 

 

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