According to a recent survey by the National Association for Business Economics, economists are predicting that annual inflation will remain above 2% over the next three years. They say rising wages and the strong demand for goods and services are partly to blame. In other news, CNBC reports major shift changes are underway at the Fed. Experts say that at the Fed’s December meeting, officials will likely decide to double the pace of its tapering to $30 billion a month and discuss when to raise interest rates and by how much.
Fox Business/Lucas Manfredi
Economists dial up inflation targets amid rising wages, strong consumer demand: NABE
Economists surveyed by the National Association for Business Economics are predicting that annual inflation will remain above 2% over the next three years as a result of rising wages and strong demand for goods and services.
NABE panelists project that the overall consumer price index will rise 6% year-over-year in the fourth quarter of 2021, compared to September’s forecast of 5.1%. CPI inflation is expected to remain elevated by the end of 2022 at 2.8% year-over-year, compared to September’s forecast of 2.4%.
The core PCE price index, which excludes food and energy, is expected to rise 4.1% year-over-year in the fourth quarter, compared to September’s 3.8% forecast, and slow to a 2.6% year-over-year rate in the fourth quarter of 2022. About 71% of NABE survey respondents anticipate the core PCE gauge will not decline to or below the Federal Reserve’s 2% target until the second half of 2023 or later.
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A major shift is underway at the Federal Reserve that could see a speedier end to its easy policies
A major shift is underway at the Federal Reserve to begin to remove the central bank’s massive pandemic easing policies, and could see it hike rates sooner than is priced in by markets.
Comments by Fed officials suggest the central bank is likely to decide to double the pace of its taper to $30 billion a month at its December meeting next week. Initial discussions could also begin as soon as the December meeting about when to raise interest rates and by how much next year with Fed officials set to submit a fresh round of economic forecasts and projections for the fed funds rate.
There is no consensus yet on when to begin hikes, but it’s clear that the faster taper is designed to give the Fed flexibility to raise rates as soon as the spring. The markets do not appear to expect the first rate hike until the summer.
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The Street/Martin Baccardax
Bitcoin Crash, Omicron Worries, Inflation Bets, Olympic Boycotts – 5 Things You Must Know
U.S. equity futures move cautiously higher Monday, while the dollar extended gains against its global peers and oil prices rebounded firmly, as investors entered the week eyeing developments in the Omicron spread while closing tracking inflation data ahead of a key release later this week.
Dr. Anthony Fauci, the nation’s top infectious disease expert, said Sunday that data from South Africa, where the new variant was first discovered, indicates that Omicron may induce milder symptoms than previously forecast, although its rapid spread continues to worry virologists around the world.
Omicron concerns have also been paired with bets on a more Hawkish Federal Reserve, which cautioned last week that the tapering of its bond purchase plan — the first of many steps toward higher headline interest rates — could quicken in the face of faster inflation prospects.
Weaker-than-expected jobs data Friday, which showed only 210,000 new positions added in November, has thus far failed to temper those bets, with traders eying Friday’s November CPI release.
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