"The Fed is trying to strike a balance between keeping interest rates high enough to fight inflation, but not so high as to cause a spike in unemployment. FADEL: NPR's Scott Horsley joins us now. Hey, Scott. SCOTT HORSLEY, BYLINE: Good morning. FADEL: So worries about the job market caused the Fed to lower interest rates the last three times the board met. Have those worries gone away? HORSLEY: Not entirely."
"HORSLEY: Not entirely. We're still seeing pretty weak hiring in the job market. Just this week, Amazon and UPS announced big layoffs. That said, unemployment is still relatively low, just 4.4% in December. And the Fed says there are some signs that the unemployment rate is stabilizing. So for the moment, the central bank is putting its focus on inflation and prices that are still going up faster than Fed Chairman Jerome Powell and his colleagues would like."
The Federal Reserve voted to leave interest rates unchanged while focusing on bringing inflation down toward its 2% target. Policymakers are balancing keeping rates high enough to control inflation without pushing unemployment sharply higher. Hiring remains weak with recent large layoffs at Amazon and UPS, yet unemployment held near 4.4% in December and shows signs of stabilizing. Fed Chair Jerome Powell attributes part of the inflation overshoot to President Trump's tariffs, noting importers have absorbed some costs but further tariff-related price increases may appear in coming months before inflation potentially moderates.
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