Pimco states that Federal Reserve officials are facing the challenge of balancing rising prices with the increasing risk of economic downturn. "We believe that the unemployment rate will be the final arbiter, and we still expect that if the unemployment rate begins to rise, the Federal Reserve will significantly cut interest rates," wrote Pimco economist Tiffany Wilding in the report. In the short term, Federal Reserve Chairman Powell indicated that officials remain willing to keep borrowing costs unchanged and to "proceed cautiously" on interest rate issues.