HomeFinancial MarketsFed Unlikely to Reach 2% Inflation Target, Wall Street Analysts Claim

Fed Unlikely to Reach 2% Inflation Target, Wall Street Analysts Claim

A growing number of Wall Street asset managers and analysts are becoming convinced that the Federal Reserve is unlikely to reach its target of 2% inflation within the next year. This comes after several bond-market bets were made in which the central bank was being backed to reach its target.

Fund provider VanEck projected that inflation would fall within the region of 3% to 5% for the next few years, regardless of whether the United States slips into a recession. Investment management firm Invesco believes that the market has been overly-optimistic in backing the Fed to reach its target. Citigroup Inc. echoed these sentiments, claiming that it’s near impossible for inflation to shrink while wage gains remain high.

The recent decline in asset managers’ confidence comes as they seek to avoid being blindsided as they were in 2022 when surging inflation first got underway.

“It’s going to come in peaks and troughs,” David Schassler, head of quantitative investment solutions at VanEck said of inflation trends going forward. “What happens once the economy recovers? We think inflation will rebound as it has in the past,” he continued, pinning this resurgence on rising energy prices.

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