MNI BRIEF: Higher Prices to Stay for Years - Philly Fed Survey

The Philadelphia Fed's Survey of Professional Forecasters predicts PCE inflation at 4.1% and core at 3.7% in 2021, while lifting estimates for 10-year annual-average PCE inflation to 2.2% from 2.1%.

The survey's 36 forecasters have upgraded headline and core CPI and PCE inflation at most forecast horizons compared with three months ago, with 5-year annual-average headline PCE inflation raised to 2.4% from 2.2%. Fed Presidents Robert Kaplan and Raphael Bostic have also raised their near-term outlook for prices, pushing up their preferred timeline for a taper.

In a special question done annually, forecasters dropped their median estimate of the natural rate of unemployment by a third of a percentage point to 3.78%, the lowest estimate in the history of the series. The forecasters predict the American unemployment rate will decline to 3.6% in 2024 from 5.4% currently.