"Fed Whisperer": Fed Stagnation Predictions Could Become the Focus of June Economic Forecast Summary.

"The Fed Whisperer" Nick Timiraos points out that Federal Reserve staff presented a clear stagflation forecast at their May meeting, which is important because it could become the framework for the officials' next month's submission of the "Economic Projections Summary". As usual, the Fed's description is quite measured, but Fed staff explicitly stated a significant slowdown in the labor market, which will lead to an increase in the unemployment rate this year and keep the unemployment rate high during the forecast period. Fed staff also forecast a "significant" increase in inflation this year, with a "smaller" increase in prices in 2026. It is worth noting that staff indicated that if they are wrong about their forecasts for 2026 and 2027, it is more likely to be underestimating rather than overestimating inflation risks.