Goldman Sachs
We are raising our core PCE inflation forecast to 3.7% at end-2022 (vs. 3.1% previously)
- and 2.4% at end-2023 (vs. 2.2%).
- Accounting for a wider CPI-PCE gap, this implies 4.6% headline CPI inflation at end-2022 and 2.9% at end-2023.
A very high inflation path in 2022 should make an easy case for steady rate hikes at all seven remaining FOMC meetings.
- In light of our higher inflation forecast for 2023, we now expect four additional quarterly hikes next year (vs. three previously), resulting in a slightly higher terminal funds rate of 2.75-3%.
