The Federal Reserve (FED) spokesperson: Powell and colleagues may continue to adopt a wait-and-see approach and decide not to cut interest rates for now.

On May 7, Wall Street Journal reporter Nick Timiraos, known as the "Fed's mouthpiece", wrote an article saying that Trump's chaotic tariff policy has put the Fed in a dilemma: whether to deal with a recession or stagflation. This week, a two-day policy meeting of Fed officials will focus on how to communicate cautiously amid these tough trade-offs. Fed Chair Jerome Powell and his colleagues are likely to continue to take a wait-and-see stance, not cutting interest rates for the time being, and figuring out how to fine-tune this strategy. This "strategic patience" reflects the reluctance of Fed officials to give up prematurely in the fight against inflation. The current challenge for the Fed can be compared to a goalkeeper's dilemma: whether to "pounce to the right" – keeping interest rates unchanged to curb inflation, or "to the left" – to respond to slowing economic growth by cutting interest rates. "We're going to make a judgment that's undoubtedly very tough," Powell said last month. If the Fed intervenes too soon and tries to provide stimulus before the economy slows, it could exacerbate short-term inflationary pressures triggered by tariffs or commodity shortages. "It's not going to be a cycle where the Fed will cut interest rates early because of the anticipation of an economic slowdown. They need to see signs of a slowdown in the actual data, especially in terms of the labor market," said Richard Clarida, who served as Powell's deputy for three years.