The Fed Chair just dropped some real talk about where rates are headed. Here's the thing: policy would actually be tighter right now if the labor market wasn't flashing warning signs. That's the trade-off they're wrestling with.

On inflation running hot? He's pointing fingers at tariffs as the main culprit. The key word here is "one-time" - suggesting these are level shifts in prices rather than persistent pressures. That matters for whether they keep hiking or hold steady.

But here's the concern keeping them cautious: the employment picture has meaningful downside risks brewing. When the Fed starts talking about "significant" risks to jobs, that usually means they're closer to easing than tightening. Markets should be watching jobless claims and payroll data extra closely right now.