Nonetheless, the budget documents already show much
higher outlook for inflation next year, mainly as a result of the VAT rise.
Not exact matches
Draghi said Wednesday that
higher inflation, not growth, is the «very clear condition»
for the central bank to end its bond - buying stimulus program, and that risks to the
outlook remain.
As usual, I don't place too much emphasis on this sort of forecast, but to the extent that I make any comments at all about the
outlook for 2006, the bottom line is this: 1) we can't rule out modest potential
for stock appreciation, which would require the maintenance or expansion of already
high price / peak earnings multiples; 2) we also should recognize an uncomfortably large potential
for market losses, particularly given that the current bull market has now outlived the median and average bull, yet at
higher valuations than most bulls have achieved, a flat yield curve with rising interest rate pressures, an extended period of internal divergence as measured by breadth and other market action, and complacency at best and excessive bullishness at worst, as measured by various sentiment indicators; 3) there is a moderate but still not compelling risk of an oncoming recession, which would become more of a factor if we observe a substantial widening of credit spreads and weakness in the ISM Purchasing Managers Index in the months ahead, and; 4) there remains substantial potential
for U.S. dollar weakness coupled with «unexpectedly» persistent
inflation pressures, particularly if we do observe economic weakness.
The
outlook for inflation — and
for Fed rate hikes to counter the threat — continues to push
higher.
As discussed above, the
outlook for inflation over the next year remains quite benign, due to the assumed effects of the
higher exchange rate.
Given that the effects of QE2 are subsiding, the FOMC moves the Fed funds sentence up
higher in the document and moves up the language that «low rates of resource utilization and a subdued
outlook for inflation over the medium run — are likely to warrant exceptionally low levels
for the federal funds rate
for an extended period.»
A number of officials viewed a stronger economic
outlook and greater confidence
for higher inflation implying «the appropriate path
for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected,» the Federal Open Market Committee said in the records of its March 20 - 21 meeting.
Turning to
inflation, Worth stressed that the
outlook is
for modestly
higher inflation going forward.