Inflation may rise in 2023-Fed
2023.01.05 13:41
Inflation may rise in 2023-Fed
Budrigannews.com – James Bullard, the head of the St. Louis Federal Reserve, said on Thursday that the new year might finally bring some much-needed relief for inflation.
Bullard stated in material prepared for a presentation before a meeting held by the CFA Society St. Louis that the rate-setting Federal Open Market Committee “has taken aggressive action during 2022, with ongoing increases in the policy rate planned for 2023, and this has returned inflation expectations to a level consistent with the Fed’s 2% inflation target.” As the real economy returns to normal, actual inflation is likely to fall in 2023 in line with inflation expectations.
That outlook was not specifically linked to Bullard’s advice regarding rate changes. In 2022, a year marked by the central bank’s historically aggressive campaign to raise rates to lower some of the highest levels of inflation seen in decades, Bullard held a voting role on the FOMC.
As a result, the overnight short-term rate target was moved from close to zero in March to the current range of 4.25% to 4.50%. The Fed last increased that target by 50 basis points in December, anticipating a move to 5.1% this year. Officials have stated that no matter where they stop raising rates, they will likely do so for some time to ensure that inflation pressures are decreasing.
In his presentation, Bullard stated that although monetary policy is not currently holding back the economy, it will soon be. “May combine to make 2023 a disinflationary year” due to this and low inflation expectations.
In addition, Bullard stated in his remarks that the economy improved after a poor start to the year in the second half of the previous year. He stated that it appears as though the growth of the United States’ gross domestic product is slowing down to somewhere around its potential for the long run of 2%. Additionally, Bullard stated that the job market remains “strong.”
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