A U.S. central bank (Fed) official expects U.S. GDP growth of around 1% in 2023, a higher anticipation than the institution predicted in December, when it released its latest forecast economic.
I expect GDP growth to be around 1% for 2023, New York Fed President John Williams told the New York Bankers Association on Tuesday.
The most recent economic forecasts from the Fed’s Monetary Policy Committee (FOMC) were published following its meeting on December 13 and 14. GDP growth of 0.5% in 2023, then 1.6% in 2024, was anticipated.
Mr Williams did not say whether he expected a quarter of negative growth, or even a recession, in the year.
As for the unemployment rate, he sees it climbing a little less than expected in December, between 4 and 4.5% in 2023, against 4.6%.
Inflation is expected to fall back to 3% in 2023, before approaching our longer-term 2% target. In December, the FOMC forecast inflation of 3.1% in 2023.
This, however, is the Fed’s favorite PCE inflation index, not the benchmark CPI index, for which January data was released on Tuesday.
The CPI index slowed slightly over one year, 6.4% against 6.5% in December, and even accelerated over one month, 0.5% against 0.1%. This is the first time since September that monthly inflation has started to rise again.
PCE inflation fell to 5.0% year on year in December from 5.5% the previous month. January data will be released on February 24.
Although we have seen a certain moderation in recent months, the inflation rate remains far too high at 5%, underlined John Williams.
Our work is not yet finished. Inflation is still well above our 2% target, and it is extremely important that we achieve this target, he added.
The Fed should therefore continue to raise its rates in the coming months and keep them high for a while. It increased them by a quarter of a point at the end of its last meeting, on January 31 and February 1, placing them in the range of 4.50% to 4.75%.
