Are We Underestimating Disinflation?
(2 min read)
Despite many headline-grabbing downward revisions to US growth, most economists are not expecting inflation to fall by much. The consensus for core PCE is for a decline from 1.8% YoY in Q1 to 1.7% in Q2 and Q3 and back to 1.8% from Q4 onwards. These have been revised down from earlier, but the trend is still up (Chart 1). Even the most bearish banks on growth have core inflation only going down to 1.4%, which is the range of the last few years.
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