The Fed won't be able to bring inflation down to its target, and Americans will have to live with high prices for years, BlackRock says
BlackRock expects the Federal Reserve will have to halt policy tightening before reaching its 2% inflation target, and Americans will have to live with high prices for years to come.
Strategists from the world's largest asset manager said inflation has sparked a cost-of-living crisis, and the Fed has responded with all-out approach to cool prices. But there has been little debate about how the Fed's policies will weigh on economic growth and the labor market. "We think the 'politics of inflation' narrative is on the cusp of changing," strategists wrote in a note Monday."The cycle of rapid rate hikes will stop without inflation being back on track to return fully to 2% targets, in our view. We think we are going to be living with inflation. We do see inflation cooling as spending patterns normalize and energy prices relent – but we see it persisting above policy targets in coming years.
To be sure, the economy and labor market have remained resilient so far, despite the Fed's nine consecutive rate hikes over the last year.Meanwhile, inflation cooled in February in line with expectations,
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