Does not taking action lead to policy mistakes? "Minority economists" criticize the Federal Reserve for misjudging the situation again.

Senior macroeconomist Marko Bjegovic from Arkomina Research expressed his views after the Federal Reserve announced its decision to keep interest rates unchanged. He stated that the Fed's failure to announce a rate cut at the latest monetary policy meeting on Wednesday meant that the central bank missed a crucial opportunity to lower rates in the face of rising unemployment, resulting in a policy error. In a report published on social media, Bjegovic outlined his concerns about the Fed's decision to maintain current interest rates amid increasing signs of economic weakness in the U.S. and globally. With over 17 years of experience in financial markets, including roles as a stock broker, investment advisor, stock trading manager, and chief macroeconomist at a bank, Bjegovic currently has around 3000+ subscribers on Substack. This economist is more like a representative of "minority economists." His most recognizable subscription products may be CPI forecast reports, PCE forecast reports, and Fed monetary policy observation reports, which track high-frequency macroeconomic trends. He has a track record of accurately predicting core economic data such as CPI/PCE, outperforming Wall Street's average expectations, and often offering correct bearish views when the market consensus is optimistic, thereby gaining a large following of fans who have long followed his investment strategies. Powell: Inflation Stickiness Remains Prominent, Too Early to Judge War Impact Early Thursday morning Beijing time, the latest Federal Reserve monetary policy decision showed that the Fed paused its rate cut for the second consecutive meeting, as expected by financial markets. In the meeting statement, the Fed added uncertainty about the impact of the Middle East geopolitical situation on the U.S. economy, and changed the description of the unemployment rate from showing signs of stabilization to "basically unchanged." The focus of the market was on the dot plot, which shows the interest rate projections of Fed policymakers, and it is consistent with the dot plot released in December last year. They still expect only one 25-basis-point rate cut in 2026, and also only one cut next year. At the same time, in the latest economic forecasts, the Fed raised its year-end forecast for PCE inflation from 2.4% to 2.7% compared to December, and core PCE from 2.5% to 2.7%, and some officials even brought back the possibility of a rate hike given the impact of rising oil prices. Fed Chair Jerome Powell explicitly stated in the press conference after the meeting that the Fed may not return to the path of rate cuts until inflation cools down again. This consideration does not even include the potential impact of the Middle East war on inflation expansion, emphasizing that it is too early to judge the impact of the war now. Powell pointed out at the press conference on Wednesday that it is too early to assess the impact of rising oil prices on the U.S. economy, even though financial markets have quickly incorporated higher inflation expectations for the coming year. Instead, he emphasized signs that show that persistent price pressures have lasted longer than policymakers had hoped for, even before the outbreak of the war with Iran. "What we really want to see this year, and what's very important, is substantial progress on inflation," Powell said at the press conference. "If we don't see that progress, you won't see rate cuts." The Fed Chair made these remarks after deciding to keep rates unchanged for the second consecutive meeting. These statements reinforce the idea that the Fed is still quite far from returning to the series of rate cuts it initiated at the end of 2025, as consumer price data has not cooperated. However, Powell's firm stance on a higher neutral interest rate is likely to further upset U.S. President Donald Trump. Just on Wednesday morning, Trump once again urged the Fed to cut interest rates. Choosing to remain on hold is a mistake, says this economist This macroeconomist pointed out that the Consumer Price Index (CPI) has reached levels near the Fed's long-term target of 2%, and he believes that for the Fed policymakers, CPI is a more suitable indicator than the Fed's favored Core Personal Consumption Expenditures Price Index (Core PCE). The reason why he believes that the Fed's decision to keep rates unchanged is a policy error lies in his policy function being completely at odds with mainstream market expectations: he places more emphasis on the deteriorating labor market and "real interest rates still being too tight" rather than continuing to prioritize inflation risks. Bjegovic noted in his research report that more concerning is the fact that the U.S. economy is losing real jobs every month. Data cited by this economist shows that the unemployment rate has risen significantly in the past 10 months; adjusting for the decline in labor force participation, Bjegovic's exclusive calculations show that the unemployment rate has risen from 4.2% in April 2025 to 5.4% in February 2026, an increase of 1.2 percentage points. During this period, the Fed has only lowered the benchmark interest rate by 75 basis points to 3.6%, which Bjegovic describes as still being in a "very obvious restrictive range". As U.S. non-farm job growth has recently turned negative and the unemployment rate has sharply risen, Bjegovic warned that the economy may already be in a substantive recession process, exacerbated by the energy price surge caused by the war, leading to market concerns about stagflation. While further complicating the outlook for global central bank interest rates, the Fed continues to focus on long-term price stickiness risks related to inflation. In his view, the combination of negative employment growth and rapid increase in the unemployment rate in the U.S. is enough to signal a recession risk, and if the central bank delays rate cuts due to concerns about oil prices and stagflation, it will only worsen the labor market situation. It is worth noting that on social media, strategists have cited Citrini Research's recent "2028 AI Doomsday Prophecy" a comprehensive envisioning of a dystopian AI future shaped by artificial intelligence to support Bjegovic's position. Citrini predicts that in 2028, despite the unexpected surge in global AI productivity, a "global economic plague" caused by the complete upheaval of white-collar employment due to AI could trigger panic in global financial markets. Citrini Research's newly proposed "AI Prosperity Crisis" mechanism chain is: AI-agent-based intelligences are replacing white-collar jobs, leading to a decline in wages and purchasing power, eventually resulting in the emergence of "Ghost GDP" where productivity is strong but money does not circulate. Under this "anti-utopian" mechanism, the economy, traditionally driven by consumer spending (highlighted in the article as having a high consumption share), is eroded, causing a negative feedback loop in risky assets like stocks and even pushing the unemployment rate into double digits, ultimately leading to a drastic retreat of global stock markets from their highs. This description by the economist is seen as the latest example of a series of monetary policy mistakes; Bjegovic warns that the Fed's policy mistake could further worsen the already weak U.S. non-farm labor market conditions. Overall, Bjegovic's latest assessment is fundamentally a dovish and even contrarian minority position. He believes that the current real policy mistake is not responding quickly enough to the labor crisis. Meanwhile, mainstream Wall Street institutions and Fed officials believe that in the context of inflation being above the target for five consecutive years, a new round of Middle East war and risks of significant oil price hikes, a premature rate cut would be more dangerous.