Wall Street Economists Survey: US CPI Inflation Rate to Stay in 3% Range Until Year-End

[Asia Economy Reporter Park Byung-hee] Wall Street economists expect the U.S. Consumer Price Index (CPI) inflation rate to remain above 3% through the end of this year.

In a Bloomberg survey conducted from the 7th to the 13th among 71 Wall Street economists, they projected quarterly CPI inflation rates for this year at 3.8% for Q2, and 3.3% for both Q3 and Q4.

In the April survey, economists anticipated the CPI inflation rate to exceed 3% only in Q2, then fall to the 2% range in Q3 and Q4. The previous estimates were 3.1% for Q2 and 2.6% for Q3 and Q4.

Economists diagnosed that the inflation risk is increasing as the pace of the U.S. economic recovery is faster than expected. They forecast the U.S. economic growth rate this year at an annualized rate in the 9% range. The median GDP growth forecast for this year was 9.3%, which is a 1.2 percentage point upward revision from the April survey.

Economists also expect the Personal Consumption Expenditures (PCE) price index, which the Fed prioritizes, to remain near 3% through the end of this year. It is projected to be 3.0% in Q2 and 2.7% in both Q3 and Q4. These figures represent an upward revision of 0.4 to 0.5 percentage points compared to the April survey.

The core PCE price index, which excludes the volatile energy and food items, is also expected to rise by 2.4% in Q2, 2.2% in Q3, and 2.3% in Q4.

Jerome Powell, Chair of the U.S. Federal Reserve (Fed), maintains the stance that he would tolerate inflation rates slightly above the monetary policy target of 2%. He also continues to hold the view that the high inflation rates are temporary.

Most Fed officials, including regional Fed presidents, support Chair Powell’s view.

Loretta Mester, President of the Cleveland Federal Reserve, said in a Bloomberg interview on the 14th, "We expected monthly volatility," adding, "We need to be patient and wait longer to allow the economic recovery to continue."

President Mester stated, "I believe the current monetary policy is in a good state," and "We will adjust depending on how the real economic recovery progresses." She emphasized, "Now is not the time to adjust monetary policy; we need to observe how the economic recovery unfolds."

The most hawkish Fed official currently is Robert Kaplan, President of the Dallas Fed. In a speech at the Texas State University Business School on the same day, he reiterated the need to accelerate discussions on tapering quantitative easing sooner than expected. He said, "The U.S. economy is recovering significantly," and expressed concern that "inflation expectations have risen to levels inconsistent with the 2% monetary policy target."

This content was produced with the assistance of AI translation services.