Although specific opinions from FOMC members tend to be confidential, the FED offers some level of granularity when it comes to consensus, or line of thinking of its members, particularly on important matters such as inflation or unemployment. In the upper chart below, you can see the number of members that are worried about rising unemployment. In the lower part of the chart, the number of members that think inflation is going up. All but one think unemployment risk is to the upside and all members think inflation is going to rise. Basically, the chart is telling us the Fed is worried about stagflation. This is the sentiment of the committee in charge of monetary policy with the mandate of controlling prices and low unemployment. In the case of inflation, it’s the highest reading of the last 7 years. With the unemployment chart, only Sept 2022 was worse. Will the Fed lower interest rates to support unemployment knowing that inflation may rise? Can they rise rates knowing that unemployment may become a problem? Can they hold rates where they are? It very well may be a case of who’s shooting first.
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