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Fed Sees Downside Growth Risks, Upside Inflation Threat

  • Most Fed participants assessed at the June FOMC meeting risks to the outlook for economic growth were "skewed to the downside." 
  • Most also agreed that "risks to inflation were skewed to the upside and cited several 
    such risks, including those associated with ongoing supply bottlenecks and rising energy and commodity prices." 
  • "Downside risks included the possibility that a further tightening in financial conditions would have a larger negative effect on economic activity than anticipated as well as the possibilities that the Russian invasion of Ukraine and the COVID-related lockdowns in China would have larger-than-expected effects on economic growth."
  • Fed staff continued to project GDP growth would rebound in Q2 and "remain solid for the remainder of the year."
  • Staff revised up headline PCE inflation in the second half of 2022 on stronger wage growth, and sees core PCE at 4.1% in 2022, 2.6% in 2023, and 2.2% in 2024. 
MNI Washington Bureau | +1 202-371-2121 |
MNI Washington Bureau | +1 202-371-2121 |

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