According to the majority of leading academic economists polled by the Financial Times (FT) in partnership with the Initiative on Global Markets (IGM) at the University of Chicago’s Booth School of Business, the US Federal Reserve bank (Fed) is seen raising above 4% and holding it there beyond 2023.
“Nearly 70 percent of the 44 economists surveyed between September 13 and 15 believe the fed funds rate of this tightening cycle will peak between 4 percent and 5 percent, with 20 percent of the view that it will need to pass that level.”
“Most of the respondents project core PCE will drop from its most recent July level of 4.6 percent to 3.5 percent by the end of 2023. But nearly a third expect it to still exceed 3 percent 12 months later. “
“Another 27 percent said “it was about as likely as not” to remain above that threshold at that time — indicating great unease about high inflation becoming more deeply embedded in the economy.”
“Nearly 70 percent of the respondents expect the National Bureau of Economic Research — the official arbiter of when US recessions begin and end — to declare one in 2023, with the bulk holding the view it will occur in the first or second quarter.”