‘Stagflation’ risk puts Federal Reserve in tricky spot as it meets this week

So, what is stagflation, anyway, and why is it so scary?

There’s no cocktail a central banker hates more than high unemployment mixed with high inflation. That cocktail, also known as stagflation, was in the limelight after the Federal Reserve’s March meeting.

The Stagflation Risks Are Bigger Than the Fed Thinks

Stock investors don’t like slow economic growth because that means slower earnings growth, too, which is a headwind for equity prices. And they don’t like inflation because that erodes the present value of future earnings, a different and often more substantial headwind for stocks. If you combine the two — slow growth and higher inflation -- you get the worst of all worlds. So investors rightfully absolutely hate stagflation.

Cheap groceries or secure jobs? The Fed may need to choose.

The Fed isn’t expected to raise rates this week but could telegraph which risk it believes is more important in a souring economy: higher prices or fewer jobs.

Fed may still cut interest rates this year—but now it could be ‘bad news’ if it does

Even as the economy undergoes what may be wrenching changes, the Federal Reserve on Wednesday is expected to signal it could cut its key interest rate twice this year — the same forecast it issued in December. Yet the reasons for those cuts may change dramatically, depending on how the economy fares. What were once seen as “good news” rate reductions in response to a steady decline in inflation back to the Fed's target of 2%, now could become “b…

Where next for the U.S. economy? — Harvard Gazette

Work & Economy Where next for U.S. economy? Richard Drew/AP Christina Pazzanese Harvard Staff Writer March 18, 2025 6 min read Kennedy School analyst’s recession warning includes worries about trade war, stock market, risk perception U.S. markets this month suffered heavy losses after China, Mexico, and Canada responded to President Donald Trump’s tariff push by imposing levies on American goods. M…

With inflation rising but economy slowing, Fed faces dilemma on interest rate forecasts

The Fed is set to hold interest rates steady, but with inflation rising amid a slowing economy, it could reduce its interest rate outlook.