Expert Analysis: Fed Faces Dilemma Between Inflation and Economic Growth

On March 26, Jin10 reported that Benjamin Louvet, an analyst at Offi Investment Asset Management, highlighted a potential challenge for the Federal Reserve in balancing its dual mandate of employment and inflation. According to Jin10, Louvet, who leads the commodities department, noted that the Fed might struggle to decide whether to raise interest rates to combat inflation or lower them to support economic growth and employment. Louvet expressed skepticism about the Fed's likelihood of opting for rate hikes, as such measures may not alleviate supply shocks without harming economic growth. Additionally, he pointed out that the declining income of Gulf countries, major buyers of U.S. Treasury bonds, could weaken U.S. debt financing. This situation might compel the Fed to lower interest rates or even resume bond purchases to bolster the economy.