Fed minutes show rising unemployment, stagflationary risks
Source: The Hill
05/28/25 5:04 PM ET
Minutes from the May meeting of the Federal Reserve’s interest rate-setting committee show stagflationary risk to the economy as a result of new White House trade policies and higher projections for unemployment through the next couple of years.
Fed bankers weighed in with their outlook for the economy in the middle of Trump’s tariff blitz, prior to the trade truce with China earlier this month that paused mutually imposed triple-digit tariffs. However, the decidedly cooler outlook is likely to factor into the Fed’s next formal summary of economy projections as the White House pushes ahead with numerous bilateral trade deals.
Officials felt that “the labor market was expected to weaken substantially, with the unemployment rate forecast moving above the staff’s estimate of its natural rate by the end of this year and remaining above the natural rate through 2027.”
The Fed projected in March an unemployment rate of 4.4 percent for 2025 and of 4.3 percent for 2026 and 2027. The May minutes suggest those numbers will be higher. Inflation projections were higher and growth projections lower than the ones put out in the March SEP. Inflation was expected to hit a 2.7 percent annual increase this year, and growth was forecast to be 1.7 percent.
Read more: https://thehill.com/business/5322348-fed-minutes-show-rising-unemployment-stagflationary-risks/
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