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

GateUser-6433627c · 2025-05-08T12:36:49+00:00

The Federal Reserve (FED) may not be able to achieve its dual mandate of full employment and price stability simultaneously due to high uncertainty in U.S. policy. Trump's tariff policies have exacerbated the FED's dilemma, placing it in an awkward position. Although interest rate cuts are necessary, the FED may have to wait until the end of the third quarter to take action.

GateUser-6433627c

2025-05-08 12:36:49

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[Strategist: The Federal Reserve’s Dual Mandate May Move in Opposite Directions] Seema Shah, Chief Global Strategist at Principal Asset Management, stated that the Federal Reserve is in an almost desperate situation, as its dual mandate of full employment and price stability may be at odds with each other. However, the incredibly high uncertainty surrounding U.S. government policies will determine the timing and magnitude of these changes. Trump’s tough stance on tariffs has further exacerbated the Federal Reserve’s awkward position. In this context, the Federal Reserve can only choose to stand by. Rate cuts are necessary, but it seems that the Federal Reserve increasingly needs to wait until the end of the third quarter for the window of opportunity to open.

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