One Fed Model Suggests Central Bank Has Already Beaten Inflation

  • Chicago Fed study finds impact of past rate hikes yet to come
  • Inflation may return to 2% target next year without recession

The Federal Reserve’s 5.25 percentage points of interest-rate increases over the past 18 months may be enough to bring inflation down to the US central bank’s 2% target and avoid a recession, according to an analysis from two Chicago Fed economists.

“According to the model’s forecast, the policy tightening that’s already been done is sufficient to bring inflation back near the Fed’s target by the middle of 2024 while avoiding a recession,” Stefania D’Amico and Thomas King wrote in a letter published Wednesday on the Chicago Fed’s website.

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