With inflation and jobs in ‘tension,’ Powell warns of the Fed’s tightrope on interest rates

By Bryan Mena, CNN

Washington (CNN) — The Federal Reserve is doing a difficult balancing act, trying to tamp down inflation while lifting up the job market, Chair Jerome Powell said Tuesday.

“There is no risk-free path for policy as we navigate the tension between our employment and inflation goals,” Powell said in prepared remarks for an event hosted by the National Association for Business Economics.

President Donald Trump’s sweeping policies on trade, immigration and government spending have thrust the world’s most powerful central bank into a tricky situation rarely seen since it was established more than a century ago.

Trump’s tariffs have already pushed up some prices, according to Commerce Department data, and in September, more small businesses said they’re planning price hikes in the coming months, a survey from the National Federation of Independent Business on Tuesday showed.

Meanwhile, there have been mounting signs of a weakening labor market. Job growth in recent months has been anemic, people are staying unemployed for longer, and there are now more unemployed people seeking work than there are job openings.

To make matters more complicated, the shutdown of the federal government has suspended the release of most official economic data, which the Fed relies on to understand the economy.

Powell said the Fed looks at “a wide variety of public- and private-sector data that have remained available” and that “we also maintain a nationwide network of contacts through the Reserve Banks who provide valuable insights…”

“Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago,” he added.

Fed officials lowered borrowing costs for the first time this year in September, when they also warned about the risks to both inflation and jobs.

This story is developing and will be updated.

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