The Globe and Mail reports in its Thursday, May 29, edition that U.S. Federal Reserve officials acknowledged potential "difficult tradeoffs" ahead, such as rising inflation and unemployment, amid financial market volatility and recession risks, according to minutes from their May 6-7 meeting. A Reuters dispatch to The Globe reports that the outlook has shifted since then due to President Donald Trump's decision to postpone severe import tariffs on China that had raised bond yields and lowered stock prices. However, the minutes revealed ongoing discussions within the Fed about the implications of the uncertain Trump administration policies, with tariffs still on hold but not fully withdrawn.
Officials at the meeting highlighted bond market volatility as a financial stability risk and noted that changes in the U.S. dollar's safe-haven status and rising Treasury yields could have lasting economic implications. Fed officials see the risk of rising inflation and unemployment together, which may force them to choose between tightening monetary policy to combat inflation or lowering interest rates to support growth and jobs. The uncertainty still felt today was also the watchword at the meeting in early May.
© 2025 Canjex Publishing Ltd. All rights reserved.