Inflation or Unemployment? Why the Fed Is Divided: QuickTake

After announcing a second reduction in a row of the Federal Reserve’s benchmark interest rate on Oct. 29, Fed Chair Jerome Powell made clear that there is division among the central bank’s policymakers over which of their two main goals is most important now. Determining interest rates involves a tough balancing act for the Fed, which aims to deliver price stability and full employment. Drastic policy shifts by the Trump administration in trade and immigration have brought the two sides of the central bank’s mandate into conflict.

What is the Fed’s balancing act?

Since 1977, Congress has given the Fed a dual mandate: promote both ...