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Fed is in 'precarious spot' between rates, inflation, tariffs

The consumer remains central to the US economy, as it drives roughly 70% of activity, making watching US fiscal and monetary policies all the more crucial. Prime Capital Financial deputy chief investment officer Will McGough joins Wealth to highlight the Federal Reserve’s "precarious" position amid hot inflation data, President Trump's tariffs, and higher energy prices. "Inflation numbers last month ticked up. [Fed officials have] been cutting [interest] rates so, you've got a potential distressed consumer coming to board with tariffs raising prices," McGough explains. With the Fed potentially staying at an elevated neutral rate, he sees the opportunity for long-term earnings growth but stresses the importance of monitoring inflation trends. "The curve coming down is the more likely scenario, and you might as well be able to clip the yield and participate if the curve does come down as well by having duration," McGough says on maintaining continuity in portfolios. Additionally, McGough points out the need to pay close attention to the data that will guide the Fed’s decisions, saying "It’s a wait and see" approach. To watch more expert insights and analysis on the latest market action, check out more Wealth here. This post was written by Josh Lynch