Analysis: The Fed May Face a Dilemma in Its Dual Mandate

Odaily News According to a report by Benjamin Louvet, an analyst at Ofi Invest Asset Management, the Federal Reserve may face a dilemma regarding its dual mandate of employment and inflation: should it raise interest rates to combat inflation, or lower them to support economic growth and employment? The head of the commodities division stated, "Since raising rates cannot alleviate supply shocks without harming economic growth, it seems unlikely the Fed will choose to hike rates." Furthermore, a decline in income for Gulf countries, which are major buyers of US Treasuries, could also weaken US debt financing and force the Fed to lower interest rates or even resume bond purchases to support the economy. (Jin10)