Inflation in the United States is likely to remain elevated in 2023, according to a recent survey of economists. The survey, conducted by Bloomberg, found that the median forecast for inflation in 2023 is 3.3%, well above the Federal Reserve’s target of 2%..
The survey also found that economists expect the Federal Reserve to continue raising interest rates in an effort to combat inflation. The median forecast is for the Fed to raise rates by a total of 75 basis points in 2023..
The persistence of high inflation is a major concern for policymakers, as it can erode the purchasing power of consumers and businesses. It can also make it more difficult for the Federal Reserve to achieve its goals of price stability and maximum employment..
There are a number of factors that are contributing to high inflation, including the war in Ukraine, supply chain disruptions, and strong consumer demand. The war in Ukraine has led to higher energy and food prices, which are feeding into inflation. Supply chain disruptions are also making it more difficult for businesses to get the goods and materials they need, which is also pushing up prices. And strong consumer demand is putting upward pressure on prices as well..
The Federal Reserve is raising interest rates in an effort to cool inflation. Higher interest rates make it more expensive for businesses to borrow money, which can slow down economic growth. Slower economic growth can lead to lower inflation, as businesses are less likely to raise prices when demand is weak..
However, raising interest rates can also have negative consequences. Higher interest rates can make it more expensive for consumers to borrow money, which can slow down consumer spending. Slower consumer spending can lead to lower economic growth, which can have a negative impact on jobs..
The Federal Reserve is facing a difficult challenge in trying to bring inflation down without causing a recession. The Fed will need to carefully balance its efforts to combat inflation with its goals of promoting economic growth and maximum employment..
The survey of economists was conducted by Bloomberg from January 16-19, 2023. The survey included 42 economists from a variety of institutions, including banks, investment firms, and universities..
