This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at the Fed’s path through low unemployment and firming inflation, the reemergence of political risk, President Trump’s snub of old friends, and a Republican move to undo the White House’s deal with China’s ZTE. TOO MUCH OF A GOOD THING? The Federal Reserve’s dual mandate is maximum employment and stable prices. Let’s take those one at a time, starting with an unemployment rate at 3.8%. The U.S. has seen such lows only twice in the past half-century, for a few years in the late 1960s and one month in 2000, WSJ Fed watcher Nick Timiraos writes. The former preceded years of soaring inflation that took a decade for policy makers to wrestle to the ground. The latter coincided with the tech bubble, followed by the 2001 recession. The big question: the economy at risk of overheating again? The Fed’s answer will shape whether millions left behind in this expansion get a chance to join in; whether inflation—stamped out and buried over the past quarter-century—makes an unexpected comeback; or whether financial bubbles, which crippled the economy twice in the past 20 years, return. ON TARGET There is no set Fed target for unemployment. There is for inflation—2%. The level has been elusive for years, though Tuesday’s consumer-price index is expected to show inflation continuing to firm. That should give Fed officials some comfort when they (probably) decide to raise rates on Wednesday. Economists expect 2.7% annual growth for headline CPI and 2.2% for core, which excludes food and energy. But…CPI isn’t the Fed’s preferred measure. The personal-consumption-expenditure price index historically runs about 40 basis points lower than CPI. If you look at core, which knocks out the most volatile components of inflation, the Fed is still just shy of its target. Can it get there? “For this to happen, goods deflation either has to moderate and/or services inflation needs to accelerate. This could be a tall task for the Fed,” said Natixis Joseph LaVorgna. The call: Fed officials are likely to announce Wednesday plans to raise their benchmark interest rate to a range between 1.75% and 2%, the second quarter-point increase of 2018. The big question: Will they forecast a total of three or four increases for the year? How much lower can the unemployment rate go without triggering too much inflation? Write to Jeffrey Sparshott at email@example.com, tweet to @WSJecon and visit wsj.com/economy for the latest. WHAT TO WATCH TODAY The U.S. consumer-price index for May is expected to rise 2.7% from a year earlier, accelerating from April’s 2.5% gain. Excluding food and energy, CPI is expected to rise 2.2%. The Senate Banking Committee at 10 a.m. ET is scheduled to vote on two Fed nominations: Richard Clarida as vice chairman, and Michelle Bowman as a member of the board of governors. TOP STORIES IF YOU COME TO A FORK IN THE ROAD, TAKE IT Central banks in the U.S. and Europe are both expected to move this week to unwind stimulus policies adopted since the global financial crisis a decade ago. But the likely steps mask a recent divergence in economic fortunes, which look set to keep the central banks on different interest-rate tracks for many months to come. While the Fed likely lifts rates Wednesday, the ECB could signal Thursday it won’t start raising for some time even as it moves to phase out its €2.5 trillion ($2.95 trillion) bond-buying program, David Harrison and Tom Fairless write. ECB officials are pondering the causes of a recent slowdown in eurozone growth, as well as the risks posed by international trade spats, higher oil prices and political turbulence in the bloc’s No. 3 economy, Italy. A GAME OF RISK In recent years, global economic growth and central-bank stimulus have drowned concerns over political risk. Now it’s back, Georgi Kantchev writes. North Korea, stresses in the eurozone and emerging trade tensions have been among a number of political factors spurring often vertiginous moves in stocks, bonds and commodities in recent months. This confluence of major political events comes as global growth shows signs of slowing and central banks start withdrawing the easy-money policies. “It’s a different, more volatile environment, so markets are much more prone to react to political risk,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management. WITH A LITTLE HELP FROM MY FRIENDS Until the blowback from steel tariffs and the dissension at the Group of Seven summit, there were signs President Donald Trump was forcing other countries to make concessions that they probably wouldn’t have without his pressure—from quotas on South Korean steel to lower tariffs on auto exports to China. The concern is that Mr. Trump’s tough-guy approach gives him leverage, but he doesn’t use it effectively, Greg Ip writes. More recently, for example, the president’s approach to trade has alienated rather than cultivated allies, uniting them against the U.S. instead of China. REPUBLICANS #RESIST Resistance to U.S. demands abroad isn’t much of a surprise. At home? In a rare rebuke of the president, Republican Senate leaders set up a vote that would undo the White House deal to revive Chinese telecommunications company ZTE Corp. Democratic and Republican lawmakers said that an agreement had been reached to ban ZTE from buying components from U.S. suppliers, Siobhan Hughes reports. The Commerce Department in mid-April had blocked exports to the company, a death knell for ZTE. The Trump administration agreed to lift the ban as part of a larger deal in which ZTE would pay a $1 billion fine and allow U.S. enforcement officers inside the company to monitor its actions. CHART OF THE DAY: ROCKET MAN Whoever says investors aren’t excited about the prospect of thawing relations between North Korea and the world hasn’t been looking at South Korean construction stocks. Take a small company called Busan Industrial Co. It has become the best performer in Korea’s benchmark Kospi index this year, Saumya Vaishampayan and Steven Russolillo write. South Korean President Moon Jae-in has been pushing plans to connect the North and South Korean economies, including opening air, road and rail links that would require major construction efforts. TWEET OF THE DAY [wsj-responsive-sandbox id = "0" ] WHAT ELSE WE’RE READING A startup called Nuro wants to speed development of driverless cars by getting rid of the passengers. Instead, it will deliver pizzas. “It can make a jolting brake if it sees something on the road or cruise untroubled over a small bump—wrinkles that companies building autonomous taxis work tirelessly to remove,” Mark Bergen writes for Bloomberg Businessweek. Got stimulus? Nine years ago, in the depths of the Great Recession, President Barack Obama signed the American Recovery and Reinvestment Act. It definitely created jobs and boosted wages. But each job cost taxpayers about $53,000, Bill Dupor and Peter McCrory write in the Royal Economic Society’s Economic Journal. UP NEXT: WEDNESDAY U.K. consumer prices are out at 4:30 a.m. ET. The U.S. producer-price index for May, out at 8:30 a.m. ET, is expected to rise 0.3% from the prior month. Excluding food and energy, economists expect 0.2%. The Fed’s monetary-policy statement is due out at 2 p.m. ET. Fed Chairman Jerome Powell’s press conference is at 2:30 p.m.