Three Federal Reserve Bank presidents said Tuesday that while there's no recession in the forecast, there's no rate cut either. The three presidents each described a cautious approach shaped by uncertainty.

Across the pond, the European Central Bank said Wednesday that a sharp increase in uncertainty about a range of government policies, from trade to defense, has put the financial system at risk.

In Asia, Indonesia's central bank has resumed its rate-cutting cycle as cooling inflation, slower growth and a steadier rupiah offer room to loosen policy settings.

And Australia’s central bank has successfully contained inflation without trampling on employment or having to engineer a recession, giving the economy its best chance of meeting the threats that are present globally.

There’s no recession in the forecast. But there’s no rate cut either.

That was the message from three Federal Reserve Bank presidents speaking at the Atlanta Federal Reserve’s financial markets conference on Amelia Island Tuesday evening.

San Francisco’s Mary Daly, Cleveland’s Beth Hammack and Atlanta’s Raphael Bostic each described a cautious approach shaped by uncertainty, not urgency.

“We’re in center position,” Daly said. “My reaction function is to stay in center position and be prepared to move agilely, but not abruptly or quickly when we don’t need to, because we don’t have enough information to really bring those confidence bands in.”

Wait-and-see has been the Fed’s message as President Donald Trump’s trade policy roils markets and ripples through the economy. Last week, Moody’s downgraded U.S. credit and projected the federal deficit will swell to nearly 9% of GDP this year, up from 6.4% in 2024. The downgrade raises fresh questions about Washington’s ability to manage its debt over the long term, even as the White House pushes for more tax cuts.

Hammack, the newest Fed president and a former Goldman Sachs executive, laid out three possible scenarios. The first is that tariffs act as a one-time price shock that weighs on growth and has implications for the labor market. The second is that businesses start slowly embedding tariff costs into prices, then inflation could stay elevated for longer, requiring higher rates. And the third is that both inflation and unemployment worsen at the same time, creating a difficult trade-off between its two mandates for the Fed.

“I am a person of action,” Hammack said. “But right now, I think the best action we can take is to sit on our hands.”

Bostic was more definitive. “I don’t have a recession in my outlook,” he said. Still, he noted, many business leaders are holding off on big investments until they get more clarity on trade policy, immigration and fiscal priorities. “The bones of the economy are sound,” he said. But new projects and innovation, he said, are largely on hold. (Barron's)

“A look-through policy has risks and costs,” Musalem said in remarks prepared for delivery at the Economic Club of Minnesota. “Committing now to ignoring higher inflation from tariffs, or to easing policy, runs the risk of underestimating the level and persistence of inflation.” (Barron's)

In a massive understatement this week, the head of the Reserve Bank of Australia, Michele Bullock, described the coming together of historically low unemployment of around 4.0% and the coolest inflation numbers in nearly four years as “so far so good.”

Never one to blow her own horn, Bullock will know that beating back the biggest inflation surge in four decades while keeping the lights on across the economy is a significant achievement. More importantly, it’s happened in the nick of time. Read more.

7 a.m.: MBA Weekly Mortgage Applications Survey
10 a.m.: State Employment and Unemployment
7 p.m.: U.S. President Donald Trump meets South African President Cyril Ramaphosa at the White House

8:30 a.m.: Chicago Fed National Activity Index (CFNAI)
8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims
9:45 a.m.: U.S. Flash Manufacturing PMI
9:45 a.m.: U.S. Flash Services PMI
10 a.m.: Existing Home Sales
10 a.m.: Advance Quarterly Services
11 a.m.: Federal Reserve Bank of Kansas City Survey of Tenth District Manufacturing
7 p.m.: FRB New York President John Williams speaks at Monetary Policy Implementation Workshop

Moody's downgrade to U.S. sovereign debt has no serious implications for the nation's creditworthiness given the dollar's status as the global reserve currency, Pepperstone strategist Michael Brown says in a note. U.S. creditworthiness depends on the dollar retaining this dominance, alongside the Federal Reserve's independence and coherent policymaking split between three branches of government, he says. For now, all those conditions remain intact. "It also goes without saying that there is practically no chance the U.S. defaulting on its debt obligations," he says. The downgrade has few implications for the fiscal or macroeconomic outlooks, which is keeping the DXY dollar index above the 100.000 level. — Renae Dyer

Fed governor Adriana Kugler acknowledges challenges facing public-sector careers right now while encouraging economics graduates at the University of California, Berkeley to participate in the marketplace of ideas and to apply their academic backgrounds in promoting greater prosperity. "It is, of course, to put it mildly, a very challenging time to be thinking about starting a career in public service, at least at the federal level," Kugler says. Nonetheless, she says, economics expertise remains critical, especially in the face of rising disinformation and trolling. The federal workforce is under pressure from the Trump administration's cost-cutting efforts. Separately, last week, Fed Chair Jerome Powell wrote in a memo to staff that the central bank system would trim its workforce by 10% in the coming years. — Matt Grossman

• Japan’s exports to the U.S. fell in April for the first time in four months as the effects of higher tariffs started to kick in. Exports to the U.S. dropped 1.8% in April from a year earlier.
• Exports from South Korea fell 2.4% from a year earlier in the first 20 days of May, with U.S.-bound shipments plunging almost 15%, according to preliminary customs data released Wednesday. (Dow Jones Newswires)

• Critical mineral supplies are increasingly concentrated in a handful of countries, with the threat of disruption growing as export bans multiply and diversification efforts face stiff hurdles, according to a report on the sector by the International Energy Agency.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.