Survey shows inflation to exceed Fed’s 2% target well into 2023

According to Bloomberg’s latest monthly survey of analysts, inflation is expected to be well above the Fed’s target rate this year, and it will take longer to get back close to the 2% target. The consumer price index will average 5% this year, compared to last month’s forecast of 4.6%, according to the median of 76 economists polled on February 4.

The personal consumption expenditure index, which is the Fed’s preferred measure of inflation, is expected to average 4.2% in 2022, more stable than last month’s projection of 3.8%. Both metrics will average over 2% in 2023, they said.

Inflation, which is at its fastest pace in 40 years by both measures, is the primary concern of Federal Reserve policymakers, who are under pressure to contain it. They are expected to start raising interest rates in March and traders are increasing their bets on a half-point hike next month. The rise in consumer prices over the past month has been widespread, showing that price pressures are spreading beyond pandemic-related commodity categories like cars to services like health insurance and rent.
 
Growth also suffered a sharp slump at the beginning of the year. Expectations for Q1 gross domestic product halved to an annualized 1.5bn. Economists have fully assessed the impact of the Omicron variant as well as higher-than-expected inflation. for the second trimester and reduced for the third trimester. Much of the weakness in the first quarter can be attributed to consumer spending, which is now expected to rise 1.8% compared to 2.5% in the January survey.
 Inflation is eating away at Americans’ paychecks, leaving less discretionary income after rising food and gas prices.