The Federal Reserve's Price Inflation Expectations

Here's a great chart which highlights the Fed Open Market Committee's price inflation forecasts for the next 2 years.

Note well that there is no expectation by the FOMC for price inflation to be significantly different than current level inflation. This is simply trend following, with no theory behind how price  inflation may change.

If the desire to hold cash balances declines, price inflation could soar.

Currently, it appears that the desire to hold cash balances is very high, but that could change dramatically in the future.


(Chart via Macro and Other Market Musings)