The haphazard rollout of President Trump’s tariff policy threatens to put the Federal Reserve in a lose-lose scenario: Navigate a recession or manage a period of stagflation, writes WSJ’s Nick Timiraos. How the Fed negotiates tricky communications around these trade-offs will be front and center at officials’ two-day policy meeting that begins today.

Fed Chair Jerome Powell and his colleagues are on track to extend their wait-and-see stance on cutting interest rates and strategize how to refine it. This calculated patience reflects officials’ determination to avoid prematurely abandoning their inflation fight. The problem for the Fed amounts to a goalkeeper’s dilemma: Dive right to address inflation by keeping rates where they are, or dive left to counter weaker growth by cutting rates.

• WSJ’s Take On the Week Podcast: Former Fed Official Kaplan on the Rate-Cut Dilemma

U.S. services activity climbed in April, showing resilience despite trade-policy turmoil buffeting the economy and boosting prices. A purchasing managers index rose to 51.6 in April, from 50.8 in March, the Institute for Supply Management said. Economists polled by WSJ had expected a reading of 50.4, near the 50 line separating contraction from expansion.

The Trump administration is starting to put millions of defaulted student-loan borrowers into collections and threatening to confiscate their wages, tax refunds and federal benefits. There are some five million borrowers whose loans are in default, many of whom haven’t made regular payments since the pandemic. Millions more are on the cusp of default, according to the Education Department.

Hollywood has been pleading with politicians for years to help stem the exodus of film and TV production to other countries. This weekend actor Jon Voight met with President Trump to make the case. The president’s call for 100% tariffs on imported movies—which he issued in a social-media post Sunday—isn’t what Hollywood had in mind.

The Taiwanese dollar is on the move against the U.S. dollar, appreciating nearly 10% in recent trading sessions. Why is that relevant to U.S. investors, few of whom have probably ever even considered trading the island republic’s currency? Because it is potentially a preview of a world in which there is a long-term weakening of the U.S. dollar due to the Trump administration’s global trade war, write WSJ's Telis Demos and Aaron Back. And because of how individuals and companies might directly feel the consequence of less foreign investment in U.S. markets.

Time N/A: U.S. Federal Open Market Committee meeting begins
8:30 a.m.: U.S. International Trade in Goods & Services
9 a.m.: Johnson Redbook U.S. Retail Sales Index
10 a.m.: U.S. Treasury Secretary Scott Bessent testifies at House Appropriations Committee hearing
10 a.m.: Global Services PMI

Time N/A: Central Bank of Brazil interest-rate decision
7 a.m.: MBA Weekly Mortgage Applications Survey
10 a.m.: Online Help Wanted Index
10 a.m.: U.S. Treasury Secretary Scott Bessent testifies to House Financial Services Committee hearing on international finance system
2 p.m.: U.S. Federal Reserve interest-rate decision
2:30 p.m.: U.S. Fed Chair Jerome Powell press conference
3 p.m.: U.S. Consumer Credit

• Oil prices shed 2% Monday to end at a fresh four-year low after OPEC and its market allies this weekend confirmed plans to boost output again in June despite slumping fuel prices.
• The value of some Boston office buildings has tumbled by 50%, causing homeowners to pick up the tax burden.
• The U.S. could collect more than $100 billion from the European Union if new White House investigations into goods like pharmaceutical products and semiconductors result in yet more tariffs, the EU’s top trade negotiator said.
• Germany faced a political crisis after Friedrich Merz failed to secure enough support in parliament to be confirmed as the country’s next chancellor in a first round of voting, triggering fresh uncertainty in Europe.
• France’s industrial sector continued to book rising output, capping a positive start to a year that could nevertheless darken if U.S. President Trump’s trade tariffs bite into demand.
• An industrial plan China rolled out a decade ago that was criticized by the U.S. as protectionist has been highly successful in narrowing China’s technological gap with the West, a new study finds.
• A private gauge of China’s services sector signaled that activity slowed in April, falling to a seven-month low as U.S. President Trump’s hefty tariffs fueled trade tensions and hurt new orders.
• The Hong Kong Monetary Authority has sold over a 100 billion in Hong Kong dollars in the foreign-exchange market this month, as the Hong Kong currency’s strength threatens its peg to the U.S. dollar.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by Michael Maloney in New York. Send your tips, suggestions and feedback to michael.maloney@wsj.com.