The Fed is stuck.

"The world's economic outlook is perking up as growth proves more resilient and inflation is set to cool faster than previously expected in many countries, the OECD said." "The OECD raised the 2024 global growth forecast to 3.1% - from 2.9% in February - with notable improvements in its expectations for the US, China and India." "The world economy will likely avoid entering a stagflationary rut." ET. "The US economy looks to have steered clear of danger after the specter of stagflation spooked markets and put analysts on edge in recent weeks." "The key development was the April jobs report.., which showed 175,000 positions were added last month, coming in well below the consensus forecast of 238,000. Further, average hourly earnings unexpectedly declined to 0.2%." BI. 'Stagflation' is a combination of stagnating economic growth, meaning businesses aren't producing at full capacity, and employment is falling, along with inflation or rising prices. Britannica. "US worker productivity growth slowed sharply in the first quarter, resulting in a surge in labor costs," as "Non-farm output, which measures hourly output per worker, increased at a 0.3% annualized rate last quarter after rising at a 3.5% pace in the October-December period, the Labor Department's Bureau of Labor Statistics said." Reuters. "US private payrolls increased more than expected in April," "Private payrolls increased by 192,000 jobs last month after rising by an upwardly revised 208,000 in March, the ADP employment report showed." BS. "In March, the Consumer Price Index for all urban consumers...rose 3.5% over the last 12 months not seasonally adjusted. The index for all items less food and energy...up 3.8% over the year." bls.gov. These are well above the Federal Reserve's target of 2% CPI inflation. "The US central bank's 2% target for inflation is key to achieving price stability and essential for ensuring economic prosperity, New York Federal Reserve Bank President John Williams said." Reuters. "Personal income increased $122 billion (0.5% at a monthly rate) in March. Disposable personal income (DPI) - personal income less personal current taxes - increased $104.0 billion (0.5%)." Consumer spending increased by $160.9 billion. bea.gov. In its latest meeting "The US Federal Reserve held interest rates steady...and signaled it is still leaning towards eventual reductions in borrowing costs." But the benchmark policy rate will stay at 5.25%-5.50% until the Fed is sure that inflation has been contained. "In 2023, savers made $315.4 billion in interest in deposit accounts, four times the $78.7 billion they earned in 2022," because "after so many years of paltry interest rates, the Fed's rate-hike campaign that began in 2022 made it possible for savers to earn inflation-beating yields on the US domestic deposits, including bank and credit union savings accounts, certificates of deposit and money market accounts." CNN. Higher employment levels, higher disposable personal income and higher returns from savings are helping American consumers to spend more. That is probably supporting higher prices. Is the Fed complicating its task by rewarding savers with a generous 1.5%-2% real interest rate? No wonder it seems frozen.