No one likes to admit they were wrong.
The Federal Reserve clearly underestimated inflation but most officials still believe that bottlenecks are responsible. They are also likely emboldened by the latest data showing omicron fading and customers getting back to normal. Their baseline is that spending on durable goods will fade, shifting to services. That shift would take the pressure off of durable goods inflation and supply chains, to some extent.
On top of that, the last thing the Federal Reserve wants to do is add volatility. Since the Bernanke era, they've seen themselves as a steady hand, not a source of unpredictability. They wont want to go into the March FOMC decision with a 60% chance of a 50 bps hike and 40% chance of 25 bps. They'll need to take a side and I think they will want a smooth liftoff.
Today's CNBC report saying officials are "likely to embark initially on a more measured path" is a tell. Author Steve Liesman is extremely well-connected to the Fed -- he goes on fishing trips with FOMC Presidents. He's not speculating when he reported:
Several Fed officials were already looking for a bad inflation number and the January report was not substantially worse than expected. Improvement is not expected until midyear and only then, if it remains high and rising and does not respond to rate hikes and plans for balance sheet reduction, would these officials want to accelerate the pace of tightening.
Expect more Fed officials to signal something similar. When it comes down to voting, we will likely see a dissent or two for 50 basis points but I suspect there's still a deep belief that inflation will come down naturally and that the Fed doesn't need to send a panic signal.