Federal Reserve Predicts Stagflation and Rising Unemployment

According to BlockBeats, Nick Timiraos, known as the 'Fed's mouthpiece,' highlighted that the Federal Reserve made a clear stagflation forecast during its May meeting. This forecast is expected to form the basis for the Summary of Economic Projections (SEP) to be submitted by officials next month. The Federal Reserve's description remains calm as usual, but it clearly indicates a substantial slowdown in the labor market, which will lead to an increase in unemployment rates this year and maintain high unemployment levels through the forecast period until 2027. The Federal Reserve also predicts that inflation will rise 'significantly' this year, with price increases expected to be 'smaller' in 2026. Notably, Fed staff have stated that if their forecasts for inflation in 2026 and 2027, which are expected to reach 2%, are incorrect, it is more likely that they have underestimated rather than overestimated the inflation risks.