"how will the Federal Reseerve respond (interest rate movement direction) if both happen simultaniously as their mission is to keep inflation low while maximizing employment?"

Fed Chair Jerome Powell answered this himself. His latest speech:

AI Overview

Jerome Powell's most recent speech, delivered on April 4, 2025, discussed the economic outlook and monetary policy. He noted that while the economy is still in a good place, with solid growth and a balanced labor market, inflation is running higher than the 2% target, according to a speech on the Federal Reserve Board website. The Fed remains focused on achieving the dual mandate of maximum employment and stable prices.
Powell also touched on the following points in his speech:

Uncertainty and Downside Risks:
He acknowledged that uncertainty is high and downside risks have risen.

Inflation Outlook:
While inflation has fallen significantly from its peak, progress toward the 2% target has slowed recently, says PBS.

Labor Market:
The labor market remains strong, with solid hiring and a balance between supply and demand.

Monetary Policy:
The Fed's current policy stance is well-positioned to deal with the risks and uncertainties, and they remain committed to supporting maximum employment and bringing inflation sustainably to their 2% target.

Trump Tariffs:
He also addressed the potential impact of tariffs on the economy, raising concerns that they could limit business investment and hiring

YouTube: Watch Live: Fed Chair Powell's First Remarks After Tariffs Announcement | WSJ (WSJ News)

Powell's hero is Paul Volcker who tamed inflation by raising the fed funds rate after Fed Chair Arthur Burns caved to political pressure and cut, triggering inflation.

The Fed will hold unless inflation truly falls to their target (which hasn't happened) or the unemployment rate rises sharply (which hasn't happened). The Fed won't cut because of stock market volatility.

The markets are betting on cuts that won't happen. They have done this before, only to be disappointed.

Wendy