2 former Fed economists say Chair Jerome Powell is facing an epic conundrum
Briefly

Jerome Powell is contending with rising consumer prices due to President Trump's tariffs while facing a softening labor market. The Federal Reserve is holding short-term interest rates steady around 4% to manage inflation without inducing a recession. Economic signs, such as declining job openings and weak small business sales, hint at a weakening job market. Rate cuts might destabilize inflation expectations, while hikes could lead to financial panic, leaving Powell with a challenging policy environment as he looks ahead.
Fed Chair Jerome Powell is navigating a complex situation with Trump's tariffs possibly driving up consumer prices while a weakening labor market adds to the economic uncertainty.
The Federal Reserve maintains its interest rates around 4% to combat inflation, a strategy that has managed to keep the economy from recession, but challenges have emerged with tensions from tariffs.
Cutting rates risks destabilizing consumer inflation expectations, and raising them could incite panic in the financial markets, leaving Powell with limited options.
As President Trump's tariffs impose potential price increases and the labor market signals a downturn, Powell's policy decision-making faces significant challenges.
Read at Business Insider
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