Reference Message Network reported on May 9 according to an article published on the website of South German Newspaper on May 7 titled "The Fed Faces a Lose-Lose Situation". The content is as follows:
Jerome Powell can be called the "stabilizing force" in the current situation. When U.S. President Trump raged again, this Federal Reserve Chairman always maintained deliberate calmness. On the 7th, he announced the maintenance of the benchmark interest rate at 4.25% to 4.5% range with this composed demeanor, resisting the pressure from Trump to cut interest rates.
The Fed stated that one of the bases for this move was the robust performance of the job market: nearly 180,000 new jobs were added in the United States in April, and the unemployment rate remained at a low level of 4.2%. However, Fed officials also warned of the "risks" of deterioration in the labor market and a rebound in inflation. The decision to maintain interest rates unchanged met widespread expectations. The current U.S. economic situation is full of uncertainty and contradictions, and the Fed has no choice but to wait and see.
In the coming months, Powell and his fellow Federal Reserve officials may find it even harder to make appropriate responses. Various signs indicate that they may have to make a choice between two bad options. Americans call this situation "between a rock and a hard place," or "lose-lose situation" - precisely Trump's trade policies have put them in this situation.
Trump's tariffs may rekindle inflation in the United States, although this has not yet been reflected in the data. The U.S. inflation rate even dropped to 2.4% in March, but some American companies have announced that they will pass on the tariff costs to consumers. For example, at the beginning of this week, toy maker Mattel announced an increase in the price of Barbie dolls. To counteract such effects, Powell may need to maintain or even raise interest rates in the coming months.
Meanwhile, Powell must address the weakness in the U.S. economy. In the first quarter of 2025, the U.S. economy declined by 0.3%, though it did not constitute a technical recession, but according to assessments by institutions such as JPMorgan Chase, the risk of a U.S. recession before the end of the year exceeds 50%. Unpredictable tariff policies have already shaken business and consumer confidence.
The Fed could respond by cutting interest rates in an attempt to revitalize the economy.
In his speech in April, Powell candidly admitted that the Fed faces a "dilemma": a lack of experience with Trump's high tariffs. He said: "We may find ourselves in a difficult position of conflicting goals." That is, achieving good economic development and as high employment rates as possible while combating inflation.
Powell's approach has repeatedly sparked Trump's wrath. In mid-April, the president, who disrespects the independence of the Federal Reserve, ranted on "Real Social" about "impatience to fire Powell." But last weekend, during an interview, he backtracked, saying: "Why bother?" After all, Powell's term ends in May 2026. (Translated by Jiao Yu)
Original text: https://www.toutiao.com/article/7502378610373476890/
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