Fed Should Do Nothing for This Moment, Goldman’s Robert Kaplan Says

Summary

• The Fed's current "do nothing" stance is appropriate; it should act as a risk manager, not a prognosticator, given high uncertainty from the Middle East conflict.
• The U.S. economy was in a phase of cyclical strengthening (2.5%+ GDP forecast) before the conflict, not weakening, though the war will dampen that strength.
• The ultimate economic impact is unknown; the conflict will likely result in lower GDP but stickier prices (stagflationary impulse).
• Market resilience (equities, credit spreads, active M&A) is predicated on an assumption of a short-term resolution (weeks, not months); this could change if the conflict prolongs.
• The Gulf region is a critical dual node: a major source of global capital and a destination for foreign investment, both of which are currently disrupted.
• Concrete economic ripple effects are already visible: canceled orders to the Gulf, shipping/logistics struggles, and impacts beyond oil (fertilizer, helium, pharmaceuticals).
• Traditional "haven" assets (gold, 10-year Treasury) are not behaving as expected in this crisis, reducing their utility for near-term portfolio defense.
• Core client advice is long-term oriented: maintain a multi-year horizon and a steady asset allocation, avoiding emotional overreaction to current events.
• The ECB and Bank of England are more sensitive to the conflict due to European exposure to commodity (oil, fertilizer) price shocks, but Kaplan believes they too should be more noncommittal.