Things Are About to Get Complicated for the Fed

For the Federal Reserve, the test posed by the global pandemic may soon seem easy compared with handling the current administration’s wildly fluctuating trade policy. The central bank wisely left short-term interest rates unchanged on Wednesday, saying it needs to see what happens next. Trouble is, greater clarity on the outlook for tariffs won’t resolve a rapidly approaching dilemma.

The Fed’s dual mandate is to secure low inflation and maximum employment. New tariffs, even if lower than the White House first threatened, might make it impossible to do both.