Washington, (Asian independent) The US’ annual inflation will remain above the Federal Reserve’s target of 2 per cent over the next three years amid rising wages and a strong demand for goods and services, according to a survey released by the National Association for Business Economics (NABE).
“Eighty-seven per cent of panelists cite supply chain bottlenecks, 76 per cent identify strong demand for goods and reopening services, and 69 per cent list rising wages as key drivers of higher prices,” Xinhua news agency quoted the survey published on Monday as saying.
Business economists have ramped up their inflation expectations for both 2021 and 2022 compared with the last survey in September.
The overall consumer price index (CPI) is projected to rise 6 per cent in the fourth quarter of 2021 from a year earlier, compared to the 5.1 per cent forecast in the September survey.
The CPI inflation is expected to remain elevated by the end of 2022 at 2.8 per cent year-over-year, compared to the September’s forecast of 2.4 per cent.
The core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure, is now expected to rise 4.1 per cent in the fourth quarter of 2021 from a year earlier, and only slow to a 2.6 per cent year-over-year rate in the fourth quarter of 2022.
About 71 per cent of respondents anticipate that the core PCE gauge will not decline to or below the Fed’s target of 2 per cent until the second half of 2023 or later, the survey further revealed.
Meanwhile, 58 per cent of respondents anticipate that the US economy will have already achieved or will reach full employment by the end of 2022.
On an annual-average basis, the NABE panel expects the country’s real GDP to increase 5.5 per cent in 2021 before slowing to a 3.9 per cent growth rate in 2022.
Last month, the Fed began to reduce its monthly asset purchase program of $120 billion by $15 billion. At this pace, the Fed would end its asset purchases by June next year.
