Facing the choice of tariffs "wait and see," the Federal Reserve's dilemma: too early to cut interest rates raises concerns about being forced to raise them, while too late requires a more significant rate cut

The Federal Reserve maintains interest rates, caught in a dilemma by tariff risks. On Wednesday, the Federal Reserve decided again to pause interest rate cuts, with Powell reiterating his stance of not rushing to act. Notable financial journalist Nick Timiraos, known as the "new Federal Reserve correspondent," reported that the Fed is facing a tough choice between focusing more on the rising risks of inflation or the rising risks of unemployment. Timiraos pointed out that this creates more uncertainty for the Fed—cutting rates too early could lead to uncontrolled inflation expectations, while waiting too long could result in an economic recession. Adam Posen, president of the Peterson Institute for International Economics, warned that cutting rates too quickly now increases the risk that the Fed will have to reverse its policy and raise rates in a few months. Last year, several allies of Trump criticized that the Fed's rapid rate cuts were stimulating more persistent inflation risks. "It's very ironic, frankly, for those inside or close to the government to criticize the Fed for high inflation while also believing that tariff shocks won't have any impact on inflation; it's contradictory." George Goncalves, head of U.S. macro strategy at Mitsubishi UFJ Financial Group, expressed another concern, believing that the Fed's continued inaction amounts to 'passive tightening,' which may require more aggressive rate cuts to save the economy: "Waiting until July or September to cut rates could force the Fed to make larger cuts, such as half a percentage point." "That would be waiting too long. You might lose the real opportunity to save the economy." "Wait and see" becomes the Fed's new mantra According to the article's data, Powell used the phrase "wait and see" 11 times during Wednesday's press conference, clearly conveying the Fed's current policy stance. "We don't think there's a need to act hastily. We believe that being patient is appropriate," he said, "Of course, we have a record that shows—when the time is right, we can act quickly." Timiraos noted that after the Fed announced its interest rate decision, market expectations for a rate cut in June have decreased, with a general expectation that the Fed will cut rates in the second half of this year. The article cited the views of former Fed senior advisor William English: "They are in a tough spot. If I were there, I would advise them to hold off for now."