#USHouseMarketStructureDraft Markets celebrated a benign jobs report on Friday, which analysts said was a sign that Trump’s radical overhaul of US trade policy hasn’t yet dented the labor market. Strategists say that report will likely give central bankers the confidence to hold rates steady for another month. But in the months ahead, Fed officials will have to balance the twin risks of higher inflation and slowing growth—a tricky proposition.

“This is a very tough spot, because you’re seeing a stagflationary shock with the tariffs,” says Don Rissmiller, chief economist at Strategas. Tariffs will put upward pressure on prices, while the labor market is at risk as the economy slows. “That’s a problem for both mandates,” Rissmiller says. The Fed wants low and stable inflation alongside maximum employment. Higher inflation generally warrants tighter monetary policy to help slow the economy, while a slowing economy and a cooling labor market would call for lower interest rates and more stimulative policy.