A U.S. central bank (Fed) official expects U.S. GDP growth of around 1% in 2023, a higher anticipation than the institution predicted in December when it released its latest forecast economic. “I expect GDP growth to be around 1% for 2023,” New York Fed Chairman John Williams told the New York Bankers Association on Tuesday, February 14.
The latest economic forecast from the Fed's Monetary Policy Committee (FOMC) was released following its December 13-14 meeting. GDP growth of 0.5% in 2023, then 1.6% in 2024, was anticipated. John Williams did not say whether he expects a quarter of negative growth, or even a recession, in the year.
As for the unemployment rate, he sees it climbing a little less than expected in December, between 4 and 4.5% in 2023, against 4.6%. Inflation is expected to fall "to 3% in 2023, before moving closer to our longer-term target of 2%. The FOMC in December forecast inflation of 3.1% in 2023. This, however, is the PCE inflation index, the Fed's favorite, and not the CPI index, which refers , and for which January data was released on Tuesday.
The CPI index slowed slightly over one year, to 6.4% against 6.5% in December, and even accelerated over one month, to 0.5% against 0.1%. This is the first time since September that monthly inflation has started to rise again. PCE inflation fell to 5.0% year on year in December from 5.5% the previous month. January data will be released on February 24. "Although we have seen some moderation in recent months, the inflation rate remains far too high at 5%," said John Williams. "Our work is not finished yet. Inflation is still well above our 2% target, and it is extremely important that we meet this target,” he added.
The Fed should therefore continue to raise rates in the coming months and keep them high for a while. It increased them by a quarter of a point after its last meeting, on January 31 and February 1, placing them in the range of 4.50% to 4.75%.
