Fed's mouthpiece: Fed's stagflation forecast may become the keynote of June economic forecast summary

On May 29, the "Federal Reserve mouthpiece" Nick Timiraos pointed out that the Federal Reserve proposed a clear stagflation forecast at its May meeting, which is important and may become the basic framework for the Summary of Economic Projections (SEP) submitted by officials next month. As usual, the Federal Reserve's description was quite calm, but clearly indicated a substantial slowdown in the labor market, which will lead to an increase in unemployment this year and maintain high unemployment rates during the forecast period (until 2027). The Federal Reserve also predicted that inflation will rise "significantly" this year, with price increases being "smaller" in 2026. Notably, Federal Reserve staff stated that if their predictions for 2026 and 2027 (when inflation is expected to reach 2%) are wrong, it is more likely to be an underestimation rather than an overestimation of inflation risks. (Jinshi)