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Economists’ Expectations Shift Toward Rising Inflation, Higher Interest Rates

Economists also see a 25% chance of recession in the next 12 months—up from January and the first increase in two years, but well below the 65% chance estimated in the first half of 2023.

By Augusta Saraiva and Dana Morgan | February 21, 2025 at 11:37 AM
A shopper looks at egg cartons at a grocery store in New York City on February 12, 2025. Photographer: Yuki Iwamura/Bloomberg.

Economists now expect the Federal Reserve’s preferred inflation metric to rise at a brisker pace in the near term, which will prompt policymakers to keep interest rates elevated for longer.

In the latest Bloomberg survey of economists, respondents predicted that the core personal consumption expenditures (PCE) price index—which excludes the often-volatile food and energy categories—will advance 2.6 percent in the first quarter, up from the 2.5 percent rate expected last month. They also see overall PCE and the consumer price index (CPI) increasing at a faster pace this year.

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