Fed Officials Think Inflation Should Remain High Through 2024

Fed Officials Think Inflation Should Remain High Through 2024

Most people think inflation is too high today, and the Federal Reserve (Fed) should take steps to reduce it. The Personal Consumption Expenditures Price Index (PCEPI), which is the Fed’s preferred measure, grew at a continuously-compounding annual rate of 5.6 percent from November 2020 to November 2021. It has grown 3.4 percent per year since January 2020, just prior to the pandemic. If the PCEPI had merely grown at 2 percent, consistent with the Fed’s average inflation target, the price level would be 2.8 percentage points lower today. The PCEPI is presented in Figure 1, along with a 2-percent trend projected from January 2020.

Figure 1. Personal Consumption Expenditure Chain-type Price Index

Fed officials recognize that inflation is high. Testifying before the Senate Committee on Banking, Housing,…

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