Fed Thoughts

Fed Thoughts: Operating at a Loss

Fed Thoughts White Paper
October 2022

Authors & Contributors

The Federal Reserve is operating at a loss. Chief Economist and Macro Strategist Vincent Reinhart reviews the arithmetic of inflation ahead of the November 1-2 FOMC meeting.

We believe the next act of the Fed policy-setting drama will play out in 2023 and thereafter, when we expect inflation will be lower and the unemployment rate will be higher. Policymakers’ sense of the imminent threat of loss will shift from exclusive concern of inflation to a closer balance between the dual objectives. This will likely make it harder for Chair Powell to keep his committee tightly focused on inflation and unanimous in support.