Federal Reserve officials have expressed significant concern about the US economy facing a potential recession due to persistent inflation. Despite maintaining interest rates at current levels, the Fed acknowledged increasing uncertainty and a growing risk in the labor market, according to minutes released Wednesday. Trade policy changes, including new tariffs from the Trump administration and tensions with China, are cited as contributing factors to rising inflation. The Fed’s internal discussions highlight a challenging balancing act between controlling inflation and preserving employment. While acknowledging economic strength in some areas, they emphasize the need for caution while waiting to assess the true impact of government policies on the economy. The Fed’s cautious approach is highlighted by their decision to refrain from rate cuts until further information becomes available. These discussions are also shaping market expectations as futures traders predict a delay in rate cuts until early 2025.