Federal Reserve Meeting Minutes: Inflation and Unemployment Risks Rise as of May Meeting, Policy Dilemma Ensues

May 29th. The most recent release of the minutes from the Federal Reserve's May meeting indicated that Fed officials recognized at the previous meeting that in the upcoming months, they might face a "difficult balancing act," grappling with rising inflation and rising unemployment. The officials' assessment of the increased risks of an economic downturn supported this outlook. The simultaneous increase in inflation and unemployment will compel policymakers to decide whether to prioritize tightening monetary policy to combat inflation or to support economic growth and employment through rate cuts. As the economy adjusts to the higher import tariffs proposed by the Trump administration, "nearly all participants suggested that inflation might be more persistent than anticipated." The Fed anticipates that due to the tariff impact, this year's inflation rate will rise "substantially," while the labor market is "expected to weaken significantly," with the unemployment rate rising above the long-term expected level of full employment by the end of this year and remaining at that level for the next two years. (Jin Shi)