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US Fed to make only modest progress in 2023: NABE survey

28 May '23
2 min read
Pic: Adobe Stock
Pic: Adobe Stock

Insights

  • A recent survey by the National Association for Business Economics predicted that the US Federal Reserve will make only modest progress this year.
  • The median forecast is for inflation to average at 4.2 per cent this year.
  • Nearly three-fifths of respondent economists said the US economy will probably fall into a recession over the next 12 months.
In its fight against inflation this year, the US Federal Reserve (Fed) will make only modest progress, while keeping its benchmark interest rate at a 16-year high, a recent survey by the National Association for Business Economics predicted.

The median forecast is for inflation to average at 4.2 per cent this year, up from a 3.9 per cent forecast in the group’s previous survey in February. That is far above the Fed’s inflation target of 2 per cent.

Continued high inflation is expected to be the main reason for the Fed to keep its key rate at its level of roughly 5.1 per cent, its highest point in 16 years.

The survey results indicate the respondent economists don’t expect the Fed to cut rates later this year.

Fed officials agreed to raise their key rate to that level when they met earlier this month. However, Fed chair Jerome Powell signalled that the central bank will now likely pause its rate hike campaign.

The surveyed economists expect the US economy to grow by 1.2 per cent this year. Nearly three-fifths of them said the US economy will probably fall into a recession over the next 12 months. Most of those who expect a recession expect it to begin this year.

Fibre2Fashion News Desk (DS)

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