Fed’s High Inflation Forecast Baffles Wall Street After Soft CPI
- ‘Extremely strong December numbers’ implicit in new projection
- Officials may not have updated numbers after Tuesday CPI data
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The Federal Reserve’s updated economic projections this week appeared to incorporate an assumption that raised eyebrows: inflation would prove resurgent at the end of this year.
The quarterly projections showed Fed officials now expect so-called core inflation — which excludes food and energy — to end this year around 4.8%, up from the 4.5% figure they forecast in September. Yet that number looks much too high to Wall Street economists following a surprisingly-soft Labor Department release on consumer prices Tuesday, even though Chair Jerome Powell said it was reflected in the projections.