The Fed knew (a year ago that high inflation was coming)

From Scott Sumner.

"David Beckworth has a very interesting podcast with George Selgin. This exchange caught my eye:

Beckworth: Well, I was about to say we now provide a forecasted nominal GDP gap series, which is nice because it actually comes out on a monthly basis. It’s a forecast of a quarterly series, nominal GDP. But every month, the blue-chip forecasters update their forecast on nominal GDP, so it’s a nice metric. In fact, I was talking to Evan Koenig of the Dallas Fed recently. In fact, he was at the Hoover Monetary Policy Conference, and he said they were at the Dallas Fed forecasting, looking at nominal GDP. And they didn’t have this fancy nominal GDP gap model. They’re just doing basic nominal GDP forecasting. And they knew, man, by third, fourth quarter, it was going to be going above trend, and things should have tightened sooner.

Selgin: Evan is one of the sources that I was relying on. I follow what he says on these topics very closely, so I also drew on that.

A year ago, I did not realize that the Fed had decided not to make up for inflation overshoots with lower than average future inflation, which is required under average inflation targeting.  Or even to offset overshoots of NGDP, which is appropriate under some plausible interpretations of flexible average inflation targeting. If I had known, I would have been freaking out about inflation even earlier.

But the Fed knew.  Given what we now know about their FAIT policy regime and their NGDP forecasts, their behavior seems increasingly incomprehensible.  What were they thinking?"