Subject: Re: Inflation/Recession
The question is how will the Federal Reseerve respond (interest rate movement direction) if both happen simultaniously as their mission is to keep inflation low while maximizing employment?

By far the first priority is stopping inflation from getting out of control. It has the ability top destroy the economy; we need only look back a couple years to see the havoc it caused a large segment of the populace.

Employment is vital, obviously, but with unbridled inflation it won’t matter because there won’t be any jobs anyway. And inflation, once started, is devilishly difficult to control. We got lucky that Carter/Volker brought it under control in the 1980s else it would have continued spiraling as every segment tries to “catch up” at the expense of every other. Of course it took a twin recession, one of them deep and severe, to accomplish the goal, so employment suffered anyway.

Given that tariffs are per se inflationary, I would expect the Fed to recalibrate and wait, wait, wait on making any moves; those expecting a rate cut anytime soon are playing a fool’s game.