Higher inflation in 2024 likely: NABE
foxbusiness.comO'Leary Ventures Chair Kevin O'Leary discusses the outlook for the U.S. economy and stock market on «Kudlow.»
Inflation is likely to stick around at higher-than-desired levels for the rest of the year, according to a new survey by America’s top economists.
«With the higher inflation expectations, panelists now anticipate the Federal Reserve’s Open Market Committee will cut rates by half a percentage point – down from three-quarters of a point and to occur later in the year than previously expected» wrote National Association of Business Economics President Ellen Zentner, who is also chief U.S. economist at Morgan Stanley.
NABE’s May survey, which includes 43 professional forecasters, now pegs inflation to stall at 2.6%. While down from April’s consumer price index reading of 3.4%, it remains above the Fed’s preferred 2% target, a level expected to green-light interest rate cuts. Still, prices have come down sharply from the 9.1% peak.
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About 48% of market participants see theFed cutting rates for the first time in September to 5%-5.25%, according to the CME’s FedWatch Tool, which tracks the probability of rate moves. The Federal Funds rate is currently at 5.25%-5.5%.
Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C., on May 1, 2024. (Liu Jie / Xinhua)
Still, Fed Chair Jerome Powell was a bit downtrodden about the inflation battle in his remarks last week.
«We did not expect this to be a smooth road, but these were higher than I think anybody expected,» he said. «What that has told us is that we will need to be patient and let restrictive policy do its work,» he said during a panel discussion at the Foreign Bankers' Association in Amsterdam.
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