「Fed's Megaphone」: Caught Between Global Events and Domestic Employment, the Fed Can Only Watch and Wait

Wall Street Journal reporter Nick Timiraos—often dubbed the “Fed Whisperer”—wrote in a March 8 article that the Federal Reserve has long feared being forced to choose between fighting inflation and protecting jobs. Friday’s jobs report brought this dilemma one step closer. Timiraos cited Neel Kashkari, president of the Minneapolis Fed and a voting member of this year’s Federal Open Market Committee (FOMC), who recently warned the current situation could be a “rerun” of the Russia-Ukraine conflict era. Kashkari cautioned the Fed not to repeat its 2021 mistake of labeling that year’s inflation spike as temporary. On the Fed’s next moves, Timiraos speculated: “Right now, Fed officials may just wait and see. Fed Chair Jerome Powell pushed for three rate cuts by the end of last year, but each cut sparked growing internal debate among the 12-member rate-setting committee. Officials have made clear they’re in no rush to adjust rates at this month’s meeting—even a month of worrying data won’t shift that stance.” Timiraos added: If the unemployment rate keeps rising in the coming months, the Fed could resume rate cuts mid-year. But if inflation data surges again before then, internal resistance will jump sharply. A central bank facing both softening jobs and reignited inflation risk, he concluded, has “almost no good choices.”