The Fed will release minutes from its May meeting
Former CEO of Pimco Mohamed El-Erian uninvestment in Trump administration negotiations with the EU over “Claman Countdown.”
We Federal Reserve System Officials at the previous meeting acknowledged that, according to the minutes of the May 6-7 session, they could face a “difficult trade-off” in the form of rising inflation, along with rising unemployment, a prospect supported by concerns about increased financial market volatility and increased risk of recession and concerns about warnings from FRED staff.
The outlook for the foreshadowing has likely changed since then Donald Trump’s Just a week after the meeting, the decision to postpone serious import duties, including 145% collection on goods from China, led to forced bond yields, pushing stock prices down, and expanding forecasts for a US economic downturn.
However, minutes released Wednesday show that Fed policymakers and staff are engaged in the consequential debate of fallout from Trump administration policies that remain on Flux – even the highest tariffs have been put on hold, but have yet to be fully withdrawn.
Powell warns that the economy could face a “supply shock” more frequently
Minutes released Wednesday show that Fed policymakers and staff are engaged in a liquid, potential fallout debate from the Trump administration. (Saul Loeb/AFP via Getty Images/Getty Images)
Officials at the conference said volatility in the bond market before “surveillance was guaranteed” would “surveillance” as a possible risk of financial stability, noting that a change in the US dollar’s safe condition could have a long-term impact, along with rising Treasury bond yields. economy. ”
Fed officials continue to cite the possibility of inflation and unemployment in conjunction with the risk that they will be forced to decide whether to prioritize combat inflation or cut interest rates in a more stringent monetary policy to support growth and employment.
The Federal Reserve stabilizes key interest rates amidst economic uncertainty
“Almost all participants commented on the risk that inflation could prove to be more sustainable than expected as an economy adapted to the higher import taxes proposed by the Trump administration.
Fed officials continue to cite the possibility of inflation and unemployment in conjunction with the risk that they will be forced to decide whether to prioritize combat inflation with a more stringent financial policy or cut interest rates to support it, as a risk that they will work together to raise inflation and potentially unemployment. (Photographer: Nathan Howard / Bloomberg / Getty Images)
“Participants noted that if inflation turns out to be more sustainable while growth and employment outlook weakens, the (federal open market) committee could face more difficult trade-offs,” the minutes said. “It is appropriate for participants to take a careful approach until the net economic outlook has been increased further and the net economic impact of the arrangement of changes on government policies is clearer.”
There is a risk on both sides
The outlook for Rising unemployment Additionally, staff briefings predicted a “significantly” higher inflation due to tariffs and job market impacts predicted a “significantly” higher inflation rate, and a “significantly” higher inflation rate, as unemployment rates remained two years above the full employment estimate by the end of this year.
The Federal Reserve Governor warns us that it is “not sustainable” as Treasury bond demand weakens
As of April, the unemployment rate was 4.2%. Fed officials consider 4.6% representing sustainable levels in the long term, with a steady inflation at the central bank’s 2% target.
Fed officials consider 4.6% representing sustainable levels in the long term, with a steady inflation at the central bank’s 2% target. (Photo: Joe Raedle / Getty Images / Getty Images)
Most aggressive tariff delays It was imposed on China Other countries have reduced the risk of their estimated recession by many analysts.
In theory, these harsh tariffs are pending until July until negotiations on the final tax rate are held back, leaving Fed officials and executives in the dark about key aspects of the economic situation going forward.
The uncertainty we still felt today was also the password for the early May meeting when the Fed decided to stabilize its benchmark policy rates in the range of 4.25% to 4.5%. At a press conference after the meeting, the Federal Reserve Chairman Jerome Powell The central bank has shown that until the Trump administration has finalised its tariff plans and its impact on the economy is clearer, showing that the central bank has effectively been on the sidelines.
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The Fed will be held from June 17-18, and the central bank will publish new forecasts from policymakers on the outlook for inflation, employment and economic growth over the coming months and years, and think the interest rates they are forecast are appropriate.
At its March meeting, the median policymakers’ forecasts were two quarters of interest rate cuts by the end of 2025.