From Yahoo Finance: 2025-04-09 11:25:00

St. Louis Fed President Alberto Musalem predicts U.S. economic growth will fall below trend due to import tariffs, potentially raising unemployment. Monetary policy response hinges on inflation and unemployment trends, with Fed officials wary of persistent inflation requiring tighter policy despite slowing growth potentially raising unemployment. Fed officials face tough choices in balancing goals.

Market volatility, including equity selloffs and credit spread increases, signals tightening financial conditions. Fed distinguishes between sharp market changes and complete market dysfunction. Recent market dynamics reflect repricing of global growth risks, not dysfunction. Fed aims to navigate uncertain economic outlook with careful consideration of interest rate adjustments.

Fed’s 2024 outlook shifts under Trump, moving from a soft landing to slower growth, higher inflation, and increased uncertainty. Benchmark interest rate expected to remain steady in May, but investors anticipate aggressive Fed cuts. Potential triggers for rate adjustments include rising joblessness and cautious business investment plans. Unemployment rate may gradually increase, posing risks to full employment.

Read more: Exclusive-Fed’s Musalem sees growth slipping below trend, higher inflation risk