Fannie Mae Upgrades Near-Term Expectations for Inflation
Fannie Mae said Thursday its Economic and Strategic Research (ESR) Group upgraded its near-term expectations for inflation to an annualized 6.2% in the fourth quarter. The group cautions that although inflation is expected to moderate over the coming quarters, there’s increasing risk that the Federal Reserve would begin hiking the federal funds rate earlier than currently projected if inflation persists.
The ESR Group also published for the first time its expectations for 2023 real GDP growth, which it projects at 2.1%, in line with the pre-pandemic domestic growth trend.
“The Fed is in motion, pushed by inflation running ahead of their forecasts and looking less transitory than they had anticipated,” said Doug Duncan, Fannie Mae SVP and chief economist. “They left themselves some room for policy change by committing to the speed of tapering assets for only two months, where adjustments could be made thereafter.”
- ◦Economy