Slow Growth, High Inflation Worries Haven’t Gone Away Just Yet

The Fed is in a bind. The central bank seems to be acknowledging that the fight against inflation isn’t over just yet. At the same time, forecasts for the unemployment rate rose slightly as well for this year.

The combination of both higher prices and higher unemployment is known as “stagflation.” That dreaded economic scenario is challenging for central banks to navigate, because lowering interest rates could exacerbate inflation, while raising rates could hinder economic growth.

And while the Fed acknowledged Wednesday that “uncertainty about the economic outlook has diminished”—a likely nod to how anxiety about tariffs and a full-blown trade war has subsided in recent months—the central bank still said that this uncertainty “remains elevated.”