"The Federal Reserve's Mouthpiece": The reason the Federal Reserve remains inactive is that there are risks associated with any measures it might take.

On June 19, Wall Street Journal reporter Nick Timiraos, known as the “Fed’s mouthpiece”, said that at present, the Fed is not setting interest rates to help manage federal borrowing spending, but to maintain low and stable inflation in a strong labor market. The Fed is holding its ground because it sees the risks no matter what it does. Inflation is close to the Fed’s 2% target after four consecutive years of being above target, but it has not yet been fully reached. Cutting interest rates too soon, and the Fed could trigger inflation again. Many economists expect businesses to raise prices due to rising import costs, and a rate cut could spur more economic activity at the wrong time. The Fed does not want a situation in which a year later, inflation jumps again above 3% and remains at that level. Waiting too long, economic uncertainty combined with rising costs from tariffs could squeeze company profits, leading to layoffs and a recession. The recent slowdown in the housing market suggests that rising borrowing costs remain a major headwind in the interest-sensitive economy. There are more reasons for the Fed to keep interest rates unchanged as the conflict in the Middle East could reverse the recent decline in energy prices. This uncertainty alone reinforces the case for caution, as it superimposes one supply shock on top of another, a tariff-driven shock.