He and his colleagues must soon decide which of two significant risks takes priority now that the Fed’s goals of low, stable inflation and high employment are in tension with each other. Inflation, still too high for the Fed’s liking, is rising again as businesses navigate President Trump’s global tariffs. The labor market also looks increasingly fragile, with monthly jobs growth slowing nearly to a halt this summer.
If the Fed puts more weight on the threat of resurgent price pressures and holds interest rates steady when it meets next month, that could raise the odds of an economic downturn. If the Fed instead moves to shore up the labor market by restarting interest rate cuts that were put on hold in January, inflation may be more likely to get stuck above the central bank’s 2 percent target.
Mr. Powell’s high-stakes balancing act will be on full display on Friday when he makes his final address as Fed chair to the world’s leading economic policymakers at the foothills of the Teton Range in Jackson, Wyo. His remarks over the past seven years have been the biggest draw of the three-day conference, which is set to kick off on Thursday. Hosted by the Federal Reserve Bank of Kansas City, it has for decades served as the top forum for central bankers, government officials and academics to debate pressing economic issues.
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