Following the Federal Reserve's recent meeting this month, the central bank sharply raised its near-term inflation forecast. It now expects 2021's rate to come in at 4.2%, up from a 3.4% estimate in June. For core inflation, the Fed is now calling for a 3.7% increase compared with its prior 3% estimate.
For 2022 and 2023, the Fed is looking for 2.2% inflation in each year, falling to 2.1% in 2024. It nudged next year's prediction up from 2.1%.
At the same time, the Fed currently expects real GDP growth of 5.9%, down from its prior 7% estimate. The Federal Open Market Committee participants' estimate range is 5.8% to 6%, tighter than the previous 6.8% to 7.3% forecast. It did increase 2022's projection to 3.8% vs. the 3.3% estimate in June. The Fed currently expects GDP growth of 2.5% in 2023 and 2% in 2024.
Turning to unemployment, the Fed expects this year's rate to come in at 4.8%, up from its June forecast of 4.5%. The rate is currently 5.2%. The median projection for 2022 and 2023 remains at 3.8% and 3.5%, respectively. For 2024, the central bank expects unemployment to remain at 3.5%.
