Stagflation is a Lot Closer Than You Think

Edward Harrison: “The Federal Reserve is in a bind. After shockingly weak jobs data on Friday — and with inflation stubbornly above trend — it’s becoming clear that the central bank’s dual mandates of maximum employment and price stability are both offsides and pulling in opposite directions. What should the Fed do?”

“Inflation demands that the Fed stay the course, or even raise rates, yet the weakening jobs picture argues for the central bank to cut now if it is to help avoid a recession. No matter what the Fed does, one mandate will remain offsides.”