Goldman Sachs predicts a significant decline in the country’s inflation rate in 2023, but it will still be above the Fed’s target of 2%.
The bank said in a note that the core personal consumption expenditure index, which is the Federal Reserve’s preferred measure of inflation, could fall from 5.1% in September to 2.9% by the end of next year, anticipating a sharp decline in core inflation. inflation in 2023 is due to three main factors.
Goldman Sachs identified these factors as supply chain declines, declining rents and housing inflation, and a sharp slowdown in wage growth that pushed inflation to a forty-year high this year.
He noted that “From the perspective of Fed inflation, a significant decline in inflation and a return to the target are two very different things, and despite the expected improvement, core inflation will remain above the Fed’s target at every monetary policy meeting in the next year.”
Market expectations show that the Federal Reserve will raise interest rates by about 50 basis points at its meeting next month and continue to raise interest rates next year until it reaches 4.75% to 5% by mid-2023.