The Federal Reserve has two main tasks:

1. Ensure that economic growth is sufficient to create jobs and achieve full employment

2. Keep inflation under control

At present, the Fed must first solve inflation. High inflation is equivalent to eating up GDP growth. This high inflation is not caused by rapid economic growth but by massive money printing.

The amount of money printed far exceeds the GDP growth rate. The GDP growth in 2022 is below 1.6%. This is why inflation needs to be controlled below 2%. The GDP growth rate in the past two decades has also been around 2%.

The current Fed mainly wants to achieve a soft landing for the economy, so the order of solving problems is inflation, economic growth, and employment. Therefore, there will definitely be economic stimulus after inflation is solved, but the decision-making cycle is not coherent.

So the relationship between the three is that high inflation will eat up part of GDP and needs to be solved first. Okun's law states that for every additional change in unemployment, GDP will fluctuate in the opposite direction, so low unemployment is the guarantee of GDP growth.

Ultimately, inflation and unemployment both serve GDP, so if unemployment rises, it must be accompanied by economic stimulus such as interest rate cuts.