Inflation, the new Achilles heel
“It’s not going to be immediate that we see 2% inflation. It’s going to take a couple of years, but it’s going to slow down,” Mester said in an interview with CBS News on Sunday.
Mester said he was not predicting a recession despite slowing growth.
“We have growth that is slowing down a little bit below trend growth and we have the unemployment rate going up a little bit. And that’s fine, we want to see some slowdown in demand to bring it in line with supply,” Mester added, referring to to the forecasts presented last week by the participants in the meeting of the Federal Open Market Committee.
The monetary authorities expect to increase the Fed’s overnight reference rate, now in a range between 1.50%-1.75%, to at least 3.4% in the next six months. A year ago, most thought the rate should stay near zero until 2023.
On Friday, the Fed called its fight against inflation “unconditional.”