U.S. Federal Reserve officials at their last meeting acknowledged they could face "difficult tradeoffs" in coming months in the form of rising inflation alongside rising unemployment, an outlook buttressed by concerns about financial market volatility and Fed staff warnings of increasing recession risk,

The Federal Reserve released its minutes from its May FOMC meeting on Wednesday, which illustrated that nearly all central bank officials agreed on the long-term inflation impacts of President Trump's tariff policies.

Trump’s tariffs have created a dilemma for the Fed because the duties could both raise inflation — which the Fed would typically fight with higher interest rates — and slow the economy and push up unemployment, which the central bank usually tries to counter with lower rates.