The Federal Reserve’s January policy statement omitted its previous reference to inflation making progress toward its target, adding a more hawkish tone.
However, economists at Citi expect the Fed’s preferred inflation gauge, the 12-month PCE inflation rate, to decline in the coming months as the impact of sharp price increases from early 2024 fades. They also point out that both the six-month and three-month annualized core PCE inflation rates are on course to drop below 2.5%.
The economists says that the fed’s Federal Open Market Committee (FOMC) might decide that inflation “is once again making progress toward their objective–or even that it has nearly arrived at it” as early as the meeting in March.
