Is 2% Inflation in View? Be Careful What You Wish For
Economists are looking past December’s CPI numbers to scenarios where inflation drops back to target levels. Getting there too quickly is risky.
It may prove tricky to bring down inflation to 2% without overshooting.
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It’s CPI day once again. The US Consumer Price Index is firmly established as the world’s most important economic data point, and will likely remain that way until core inflation drops below the Federal Reserve’s higher range target of 3%. That will not have happened in December. However, after a number of shockers in recent months, the latest Bloomberg survey suggests that economic analysts are virtually unanimously positioned for a further drop in core CPI (which doesn’t include energy and so is unaffected by falling gasoline prices).