Federal Reserve could be in 'difficult' spot with higher prices, slower hiring

News

Federal Reserve could be in 'difficult' spot with higher prices, slower hiring

2025-04-10 05:39 Last Updated At：05:51

WASHINGTON (AP) — The prospect of high inflation stemming from widespread tariffs along with weaker hiring could put the Federal Reserve in a difficult spot, Fed policymakers said in minutes from last month's meeting.

The minutes, released Wednesday, said that the Fed could keep its benchmark interest rate unchanged if inflation remained stubbornly elevated. And they said it could cut its rate if growth slowed and unemployment rose. The minutes were for the Fed's March 18-19 meeting.

But if both happened at the same time, the Fed “may face difficult tradeoffs,” some of the 19 officials on the central bank's interest-rate setting committee said. Rising unemployment can often lead to a recession, when the Fed would normally slash its key rate to support more borrowing and spending and stimulate the economy. Yet Fed officials would likely be reluctant to cut if inflation rose, because it usually seeks to cool higher prices by keeping its key rate unchanged — or even raising it if necessary.

The minutes reflect discussions among Fed officials before President Donald Trump announced sweeping tariffs April 2 on nearly 60 countries, along with a 10% tariff on nearly all nations. Trump said Wednesday that he had paused the tariffs for 90 days, though the 10% duty would remain, as well as a huge 125% tax on imports from China.

The minutes also said that the tariffs that had been announced prior to the March meeting — on steel, aluminum, and on many imports from Canada and Mexico — had already caused many companies to delay hiring and raise prices.

Several Fed officials, according to the minutes, said that their business contacts “were already reporting increases in costs, possibly in anticipation of rising tariffs,” or “had indicated willingness to pass on to consumers higher input costs that would arise from potential tariff increases.”

Many of those same business contacts “reported pausing hiring decisions because of elevated policy uncertainty,” the minutes said.

In remarks last Friday, Fed Chair Jerome Powell said the April 2 tariffs would likely raise inflation and slow growth. He also noted that their impact would likely be temporary, but said there was a heightened chance that they could persistently raise inflation.

Inflation has come down sharply from its peak in June 2022, but it has remained stubbornly elevated even before the imposition of duties. Consumer prices were 2.8% higher in February compared to a year ago, though March figures will be released early Thursday and are expected to show inflation declining to 2.6%.

In their words: Survivors and others talk about fatal Swiss Alpine bar fire

CRANS-MONTANA, Switzerland (AP) — In the aftermath of a fire inside a Swiss Alpine bar that killed 40 people celebrating the new year, survivors, friends and family members, the region’s top authorities and even Pope Leo have spoken to the public in remarks in French, Italian, German and English, reflecting the tradition of Swiss multilingualism.

Another 119 people were injured in the blaze early Thursday as it ripped through the busy Le Constellation bar at the ski resort of Crans-Montana, authorities said. It was one of the deadliest tragedies in Switzerland’s history.

Investigators said Friday that they believe sparkling candles atop Champagne bottles ignited the fatal fire when they came too close to the ceiling of the crowded bar.

Here’s a look at what people said in the wake of the disaster:

— “I’m looking everywhere. The body of my son is somewhere,” Laetitia Brodard told reporters Friday in Crans-Montana as she searched for her son, 16-year-old Arthur. “I want to know, where is my child, and be by his side. Wherever that may be, be it in the intensive care unit or the morgue.”

— “We were bringing people out, people were collapsing. We were doing everything we could to save them, we helped as many as we could. We saw people screaming, running,” Marc-Antoine Chavanon, 14, told The Associated Press in Crans-Montana on Friday, recounting how he rushed to the bar to help the injured. “There was one of our friends: She was struggling to get out, she was all burned. You can’t imagine the pain I saw.”

— “It was hard to live through for everyone. Also probably because everyone was asking themselves, ‘Was my child, my cousin, someone from the region at this party?’” Eric Bonvin, general director of the regional hospital in Sion that took in dozens of injured people, told AP on Friday. “This place was very well known as somewhere to celebrate the new year,” Bonvin said. “Also, seeing young people arrive — that’s always traumatic.”

— “I have seen horror, and I don’t know what else would be worse than this,” Gianni Campolo, a Swiss 19-year-old who was in Crans-Montana on vacation and rushed to the bar to help first responders, told France's TF1 television.

—“You will understand that the priority today is truly placed on identification, in order to allow the families to begin their mourning,” Beatrice Pilloud, the Valais region's attorney general, told reporters Friday during a news conference in Sion.

Pope Leo said in a telegram Friday to the bishop of Sion that he " wishes to express his compassion and concern to the relatives of the victims. He prays that the Lord will welcome the deceased into His abode of peace and light, and will sustain the courage of those who suffer in their hearts or in their bodies.”

— “We have numerous accounts of heroic actions, one could say of very strong solidarity in the moment,” Cantonal head of government Mathias Reynard told RTS radio Friday. "In the first minutes it was citizens — and in large part young people — who saved lives with their courage.”

— “Switzerland is a strong country not because it is sheltered from drama, but because it knows how to face them with courage and a spirit of mutual help," Swiss President Guy Parmelin, speaking on his first day in the position that changes hands annually, told reporters Thursday.