Fed can be forced to choose between unemployment or inflation solutions, Powel

• Fed President Jerome Powell said that the current size and scale of the tariffs will increase both unemployment and inflation, while remain unchanged. The United States has caused a ruin in the 1970s, which requires a painful decline to treat the run price growth.

This Federal reserve can be decision At the same time, President Donald Trump’s tariffs of President Donald Trump voiced to make this inflation or unemployment rate.

In the last few years, the central bank had to focus only inflation. Yes, prices were high, especially in the summer of 2022, but the labor market has increased. This was a luxury to direct all his efforts to a task, despite the Fedin’s difficult one.

With tariffs The central bank, which causes widespread uncertainty throughout the economy, may be both upgrading and unemployment. The real conundrum is that one’s solution is further aggravated.

As the Fed Sikh, Jerome Powell said the Central Bank of such a scenario at a press conference on Wednesday. “

“We can never encounter, but now we must keep in mind,” said Powell.

When inflation rises, the Fed increases interest rates to cool the economy. However, when unemployment is leaving, the bank is reflected and cut rates to stimulate the economy. In both the rare scenario, Fed, Powell, both in inflation and unemployment, tend to choose which of which of which of the two is forced to choose from which one of the two.

“We expected how much the goals will be, how much the goals will be going back to their goals,” Powell said. “We are looking at all these things and make a difficult decision.”

In addition to the risk of inflation and unemployment, the United States faces low growth prospects. The slow growth pairing with high-rates of inflation is one of the most dreaded words in the economy.

What is stagflation?

The United States suffered with the most famous bull dilution In the late 1970s, the increase in oil prices, when the injured and inflation is injured and increased unemployment. The escaped price increase was fed only after the Paul Volcker fell from the wolfer, and the painful decline generated interest rates to the heights. Now there are fears that the president can put in similar acid.

“The tariffs are likely to increase in inflation, increase in inflation, the slowdown of economic growth and increase unemployment,” Powell said.

So far, most economic data stays strongso admitted as dust Consumer thinking And the other “soft data” measurements have become strange. However, the major uncertainty around the trade policy, Jamie Cox, Richmond, and Harris for Harris Financial Group in VA is great.

“The Fed said no fists for the potential potential for tariffs.”

Of course, whatever the next is the guess of everyone.

“If you are talking to businesses or market participants or forecasts, everyone is only waiting for how developments,” said Powell, “and then we will be able to better appreciate what the appropriate way for monetary policy.”

The Fed’s soft landing in the danger

When the push comes, many in Wall Street, when many Fed’s labor market is weakening and believes they can weaken low prices. Following the Powell’s press conference, traders are prices in three or four cuts by the end of the year by the CME group Fedwatch Tool.

“It will be an interesting summer,” said Greg McBride, “Bankrat” Greg McBride, Celebrated Wednesday.

Trump did it advantage Obviously: He thinks that interest rates should go down five months ago. But as McBride mentioned, the President may want to be careful what he wants.

“It is charming, especially in romanticizing the idea of ​​interest rates below the debt prospect,” McBride said. “But the reason for the low interest rates is very important. We want to reduce inflation pressure for weakening economic.

The White House did not respond immediately to a request for comment.

Fed, inflation responded slowly when inflation in 2021 reaches four decades, but the central bank’s economy is an seemingly seemingly immigrant director. Powell now acknowledged, the current coverage and tariff scale can put a word soft landing in danger.

“We will move towards these goals,” said Powell said, “If there is still a way to check the tariffs.”

Trade talks with other nations, Powell, the picture was significantly changed. Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, for example, will meet with Chinese colleagues this week.

When the Central Bank came to both full employment and price stability and price stability, Robert Conzo, Robert Conzo, said the Director General of the Wealth Alliance came to Robert Conzo Fortune.

“The fed protects the binary mandate,” he wrote in an email, “the tariff deals of the management depend on the effective conversation.”

This story was first displayed Fortune.com

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