CNBC: The Fed is ‘worried that layoffs will increase sooner and faster than hiring,’ says chief economist
The Federal Reserve (Fed) is choosing to lower interest rates despite the fact that inflation remains elevated and prices continue to rise. The article explains that the Fed faces a complex balancing act: while price pressures are still persistent, signs of a slowing labour market and softer growth are giving the central bank room to provide relief without immediately undermining its inflation-fighting credibility.
In practical terms, the Fed is betting that the risk to employment or economic momentum may now outweigh the risk of inflation rising further — especially given that many elevated prices are tied to one-time shocks (such as supply chain disruptions or tariffs) rather than a full-blown inflation spiral. The move reflects a strategic shift: rather than waiting until inflation is fully tamed, the Fed appears more comfortable maneuvering with tighter variables while focusing on ensuring the economy doesn’t tip into recession.
