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NTT Data's latest report reveals that 2,300 global corporate executives are divided on the priorities of AI innovation and responsibility, with nearly one-third prioritizing innovation, another nearly one-third valuing safety, and the rest balancing both. Despite the clear divide, three-fifths of executives acknowledge a significant gap between innovation and responsibility. The report also notes that unclear government regulation is a major factor hindering corporate AI investment.
Fed Chair Powell testified before the Senate Banking Committee on Tuesday that, given a strong job market and continued steady economic growth, the central bank sees no urgency to cut interest rates. He also noted that inflation remains somewhat elevated and warned of the unsustainable path of federal debt. Cleveland Fed President Hammack echoed this, saying policy should not be adjusted until inflation clearly returns to the 2% target.
U.S. President Trump signed an executive order on Monday imposing 25% tariffs on imported steel and aluminum, eliminating all exemptions and exclusions, effective March 12. The EU, Mexico, and Canada expressed opposition, while U.S. manufacturers worry about rising costs.
A Wolters Kluwer survey released on Monday shows that eight in ten corporate economists expect U.S. tariffs to boost inflation in 2025. Respondents raised their forecast for this year's CPI growth from 2.5% in October to 2.7%. The core PCE price index, which excludes food and energy and is closely watched by the Federal Reserve, is expected to average near 2.7% over the four quarters starting in April.
Multinational companies have spent years preparing for a 15% global minimum corporate tax, but Trump signed an executive order on his inauguration day to withdraw from the global tax deal, creating compliance uncertainty. Grant Wardell-Johnson, KPMG's global head of tax, said the next key step lies in recommendations from the U.S. Treasury and trade representatives in mid-March, and believes the global tax system could survive without U.S. support.
After a turbulent weekend, the future of the U.S. Consumer Financial Protection Bureau (CFPB) hangs in the balance. New acting director Russ Vought ordered a halt to most work and refused funding for the next quarter, sparking union lawsuits and strong reactions from bipartisan lawmakers.
Data from the U.S. Labor Department showed that nonfarm payrolls added 143,000 jobs in January and the unemployment rate fell to 4%, reinforcing market expectations that the Fed will delay rate cuts until June. Fed Governor Kugler said the labor market is healthy but inflation progress is slow, with high policy uncertainty. Futures traders see a 72% probability that the Fed will hold rates steady at the May meeting.
Tesla executives and board members significantly reduced their stock holdings this week: CFO Taneja sold approximately 7,000 shares (about $2.8 million), Board Chair Denholm sold 112,390 shares (about $43 million), and Director Kimbal Musk sold approximately $27 million. The sales occur amid U.S. regulatory uncertainty and declining European sales for the company.
The PCAOB issued a staff report on Tuesday noting that as financial reporting increasingly relies on estimates such as fair value, the use and importance of experts' work have risen, but auditors' insufficient oversight of experts' work may pose risks. The report emphasizes that auditors need to assess the adequacy of experts' work and pay attention to challenges brought by new technologies such as artificial intelligence.
The latest Grant Thornton survey shows that CFO optimism has rebounded significantly after the U.S. election, with 68% of respondents feeling optimistic about the economic outlook, the highest level since the third quarter of 2021. However, uncertainty over tax and regulatory policy continues to loom over corporate financial decisions: 33% of respondents view tax changes as the top election-related factor affecting their business this year. A Republican sweep of Congress could pave the way for new tax legislation, but the specifics remain unclear. Dustin Stamper, Managing Director of Grant Thornton's Washington National Tax Office, cautions that CFOs should not plan based on hope alone. Additionally, the Trump administration has taken a hard line on the global tax agreement (Pillar 2), which could affect U.S. multinationals. Several provisions of the TCJA are set to expire this year, and Republicans are still weighing whether to make them permanent. Meanwhile, after the Federal Reserve cut interest rates by a cumulative 100 basis points, CFOs are more optimistic about the financing environment, with 45% of respondents increasing specific investments due to the election outcome.