US Fed has duelling mandates, with ‘no risk-free path’

If the US Fed doesn’t cut interest rates, it risks a recession, and if it cuts too aggressively, it could stoke a more persistent bout of stagflation, writes KPMG US Chief Economist Diane Swonk.

The United States (US) Federal Reserve’s dual mandate - to foster price stability and full employment - is rapidly morphing into a duelling mandate. The Fed’s Beige Book revealed that the labour market remains stuck in its low hire, low fire, stagnate mode, while inflation is accelerating. It noted stickiness in service sector inflation and incidents of opportunistic pricing. The latter are price hikes on goods that are not directly tariffed but benefit from the lack of complet...

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Authors: Diane Swonk

Published Date: 21 October 2025