KEY EVENTS
The international stage remained relatively calm until the outbreak of war in the Middle East on the very last day of the month.
This is therefore an issue related to future prospects rather than to what actually occurred in February. For much of the month, attention had clearly shifted from global geopolitics to domestic developments in the United States.
The “Epstein” case remains a sort of sword of Damocles hanging over Washington’s political balance: attempts to use it to strike at the opposing party are multiplying, in a matter that, beyond political exploitation, is deeply disturbing in its intrinsic gravity.
On the economic and institutional front, the Supreme Court has finally ruled on tariffs, stating that the president is not authorized to impose them in the manner adopted by Donald Trump since last April. The intervention, however, has not dispelled uncertainty.
Some companies have already initiated legal action to seek reimbursement of the amounts paid, while the business community continues to stress that the real enemy is the lack of visibility. The administration has in fact been quick to announce new measures: initially a 10% rate was mentioned, then 15% (the maximum level allowed by legislation), before ultimately setting a temporary 10% rate for 150 days, until July 24, 2026. Only Congress will be able to extend it beyond that date.
The recent State of the Union address also confirmed—if any confirmation were needed—how polarized the domestic political climate remains, a situation likely to worsen ahead of the midterm elections (November 3). At the international level, mediation efforts between Russia and Ukraine continue, although no concrete progress has been recorded so far.
“We hold that the IEEPA (International Emergency Powers Act) does not authorize the President to impose tariffs.” February 20: The Supreme Court rules that the President does not have the authority to impose tariffs using the methods employed.
The macroeconomic environment has not shown any substantial changes. The situation on the central bank front, however, has been more dynamic.
The publication of the minutes from the January FOMC meeting revealed a Federal Reserve that is more divided than previously believed. On the one hand, some members consider that further rate cuts could become appropriate should the disinflationary process continue.
On the other hand, others favor maintaining current levels for an extended period and do not rule out additional tightening if new price pressures were to emerge.
These divergences arise at a particularly delicate moment, marked by the upcoming change in leadership: in May, K. Warsh will succeed J. Powell, who so far has had the merit of keeping an institution cohesive despite the presence of differing views within it. As for the ECB, the main development was the report published in mid-month by the Financial Times, according to which President C. Lagarde might step down before the end of her mandate, which is scheduled for October 2027.
Such a move would be interpreted as an attempt to facilitate Germany in assuming the institution leadership. However, the potential German candidates hold diverging views on the direction monetary policy should take at this stage, a factor that could reopen a debate with potentially significant implications for the markets.
PROSPECTS
Military operations in the Middle East, launched on the last day of February, have a significant impact on future prospects.
From a geopolitical perspective, the situation can be interpreted within the broader confrontation between the United States and China: Washington has intervened decisively in a region that is strategic for the energy supply of Asia. The issue therefore raises a broader question about what actions are considered legitimate toward countries that are not aligned with Western interests, with potential implications that could also extend to sensitive situations such as Taiwan. The evolution of the oil price is particularly delicate.
The interruption of exports represents a significant risk for the global balance between supply and demand. This could have a tangible impact on the cost of living, reigniting inflationary pressures at a time when the major central banks already find themselves in a complex position.
The Federal Reserve appears internally less cohesive on the eve of the leadership transition, while the ECB could also soon enter a phase of transition.
A new energy shock would therefore risk interfering with already delicate policy priorities. In this context, it is also worth recalling how the U.S. administration has for some time been exerting pressure on the central bank. It is also important to consider the growing economic weight of the region, not only in relation to oil but also as a financial and commercial hub.
Centers such as Dubai had long been perceived as largely immune to significant risks; this assumption now appears less solid in light of internal divisions within the Islamic world and the greater instability of the region.