- The President of the Federal Reserve, Austan Golsby, warns of inflation expectations It can become a prophecy of self -realization if the markets start to put them in expectations, although inflation has worked down to a target of 2 %. With uncertainty surrounding the upcoming policy decisions – such as possible definitions – Goolsbee and other experts stress the importance of carefully in prices and inflation expectations to maintain economic stability.
Consumers may be concerned about the inflation that comes down in the spear, but the head of the Federal Reserve, Austan Fuolsby, warned that the high prices will become a prophecy to achieve self if the markets start Their bread in predictions.
As a voting member of the Federal Open Market Committee (FOMC), Goolsbee, who leads the Chicago branch at the Federal Reserve, is one of those responsible for determining Matthew and the amount of the basic price reduction.
In the past few years, FOMC’s decision -making has been increased by public members and policy makers, as the group did. I tried to pull the inflation By hiking rates to the highest number in decades.
The inflation appears to be finally tracking to the target level of 2 % – it was an annual average 2.8 % in February 2025But fears of White House policies, such as definitions, cause long -term expectations.
To date consumers are the group that has Look at inflationWith the expectations issued by Wall Street come somewhat less.
For example, the University of Michigan is very appreciated Consumer survey In her latest report, she found that inflation expectations for 12 months sat with 3.5 %. Moreover, more than 10 % of consumers said they expect prices to rise by more than 15 % next year.
The most disturbing thing, the survey also found that the long term Expectations increased for five years to 3.9 %A rise of 3 % expected at the end of last year.
On the contrary, Goldman Sachs predicts an inflation in PCE (PINs) by 2.75 % on an annual basis, while Jpmorgan Chase previously Put the range for this year Between 2.1 % and 2.5 %.
However, if financial and economic institutions start significantly raising their average rate, GooLee said this will be the “main red flag”.
Goolsbee said Financial times That in this scenario, the Federal Reserve will have to change the path, adding: “Regardless of the circumstances, you should address it.”
He added: “If you start seeing the long -term inflation expectations based on the market, you begin to behave the way these surveys (consumer) in the past two months, I will see that it is a great attention device for the red science.”
He added that the “consolidation” of inflation is a major part of the role of central banks – if these goods are outside the scope of control, it is likely that the public will search for higher wages to apply for the expected price, and pay the costs of goods and services as a result.
As Chairman of the Board of Directors of FOMC Jerome Powell He highlighted his speech In the aftermath of the group’s last meeting earlier this month: “Some measures have increased in the short term recent inflation.
“After the next year or so, most of the long -term expectations are still consistent with the target of inflation by our 2 %. The medium projection in SEP for PCE is 2.7 % this year and 2.2 % in the next year, which is slightly higher than expected in December.
Undoubted road
Even Wall Street is a mighty man like Jimmy Damon who previously Pour cold water on inflation fears I warn it Increased uncertainty in the market is not good for the economy.
Goolsbee warned the same as it goes to decisions related to the basic rate. He explained: “My view is that when there is dust in the air,” wait and see “is the right approach when you face uncertainty.
“But” wait and see “not free – it comes at a cost. You can get the ability to learn new information, (but) lose some ability to move gradually.”
With the allocation of a role on April 2-on a lot of Wall Street in their evaluation to announce the following expected tariff-Golsby said next month or so will determine the tone in the near term.
He added: “When I speak to the executives here in the region, the three weeks to the next six are” a critical period (Matthew) we will solve a series of uncertainty in politics. “
This story was originally shown on Fortune.com
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