Federal Reserve spokesperson: Powell and colleagues may continue to adopt a wait-and-see approach and decide not to cut interest rates for the time being
ChainCatcher news, Nick Timiraos, a reporter for the Wall Street Journal known as the "Fed's mouthpiece," stated that Trump's tariff policy is being implemented in a chaotic manner, putting the Federal Reserve in a dilemma: should it respond to economic recession or to stagflation? This week, the Federal Reserve officials' two-day policy meeting will focus on how to communicate cautiously amid such difficult trade-offs.Federal Reserve Chairman Jerome Powell and his colleagues may continue to take a wait-and-see approach, refraining from cutting interest rates for now, while planning how to fine-tune this strategy. This "strategic patience" reflects the Federal Reserve officials' unwillingness to give up their determination to combat inflation too early.The challenges currently facing the Federal Reserve can be likened to a goalkeeper's dilemma: should they "dive to the right"—maintaining interest rates to curb inflation, or "dive to the left"—cutting rates to address slowing economic growth? "We will make a judgment that is undoubtedly very difficult," Powell said last month.If the Federal Reserve acts too early and tries to implement stimulus measures before the economic slowdown, it may exacerbate short-term inflationary pressures caused by tariffs or shortages of goods."This will not be a cycle where the Fed cuts rates early because it predicts an economic slowdown. They need to see signs of slowing in the actual data, especially in the labor market," said Richard Clarida, who served as Powell's deputy for three years.
