"Federal Reserve Speaker": The Federal Reserve's stagflation forecast may become the keynote of the June economic forecast summary

On May 29th, "Fed Messenger" Nick Timiraos pointed out that it is important that the Fed staff presented a clear stagflation forecast at the May meeting, as this could become the underlying framework for the Summary of Economic Projections (SEP) that officials will submit next month. As usual, the Fed's description was rather sober, but the Fed staff made it clear that a substantial slowdown in the labor market would lead to higher unemployment this year and keep it high over the forecast period (through 2027). The Fed staff also predicted that inflation would rise "significantly" this year and that price increases would be "less" in 2026. It is worth noting that staff said that if their forecasts for 2026 and 2027 (where inflation is expected to reach 2%) are wrong, it is more likely to underestimate rather than overestimate the risk of inflation.