Strategist: The Federal Reserve's dual mandate may head in opposite directions.

GateUser-6433627c · 2025-05-08T08:57:18+00:00

The Federal Reserve (FED) may not be able to achieve its dual mandate of full employment and stable prices simultaneously, due to high uncertainty in U.S. policies. Trump's tariff policies have exacerbated the FED's dilemma, putting it in an awkward position. Although lowering interest rates is necessary, the FED may have to wait until the end of the third quarter to take action.

GateUser-6433627c

2025-05-08 08:57:18

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[Strategist: Fed’s dual mission may go in the opposite direction] Seema Shah, chief global strategist at Principal Asset Management, said that the Fed has fallen into an almost hopeless situation, and its dual mission — full employment and price stability — could go against each other. However, the unbelievably uncertain level of U.S. government policy will determine the timing and magnitude of these changes. Trump’s hawkish stance on tariffs has further exacerbated the Fed’s embarrassment. In this case, the Fed has no choice but to sit on the sidelines. Rate cuts are necessary, but the Fed increasingly seems to need to wait until the end of the third quarter for the window of opportunity to open.

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