U.S. Outlook: Where did inflation go?
As recently as March, inflation appeared to be heating up. Fast forward to June, and the inflation landscape appears far different and the outlook for inflation far less certain.
- Consumer inflation has slowed almost in half to 1.6% from a 2.8% pace in February.
- Numerous core consumer inflation measures are also dropping, moving further away from the Fed’s medium-term target of around 2.0%.
- The big reason for the reversal of late comes down to ebbs and flows in energy and commodity prices.
- The bond market isn’t buying the Fed’s inflation forecasts.
- We continue to forecast consumer inflation next year at around 2.0%, but that is lower than we forecasted six months ago.