MNI POLICY: Inflation To Hit 2% By Year End -Phil Fed Survey

Headline PCE inflation is set to hit 2.0% by the end of the year after base effects push it as high as 2.4% in March, an improvement over forecasts just three months earlier, according to the Philadelphia Federal Reserve Bank's quarterly survey of 39 professional forecasters.

The outlook for core PCE inflation has also improved by about two-tenths to 1.9% by the end of the year.

Inflation expectations have also moved up. Over the next 10 years, the forecasters expect PCE inflation to be 2.03%, a tenth higher than the previous forecast.

MNI reported this week the Fed is coming under increasing pressure to clarify its level of tolerance for inflation.

"The outlook for the U.S. economy over the next three years looks stronger now than it did three months ago,," the survey said. Unemployment is expected to fall to 5.1% by early 2022 and to 4.0% by 2024. The annual-average projections for 2021, 2022, and 2023 are 0.4 percentage point below those of the last survey.

GDP growth will also rebound more strongly over the next three years, with a rising likelihood of beating 4.0% this year and next, the survey said.