Part 9/10:
As Powell stated, the risks to the economy are multifaceted. While the unemployment rate remains relatively low, it is edging higher, and job gains have slowed. Simultaneously, inflation remains elevated, and downside risks to employment have increased, creating a “worst of both worlds” scenario for policymakers.
The environment can be characterized as “stagflation-like,” with sluggish growth, persistent inflation, and rising political tensions. The Fed’s acknowledgment of these complexities means that future policy decisions will be highly data-dependent and subject to change.