So, while inflation forecasts show a decline in inflation, both for headline and core inflation, the uncertainty about the trajectory is very high. Forecasters are unsure about the terminal level of inflation and how fast it will get there. For example, members of the Federal Open Market Committee (FOMC) foresee, on average, personal consumption expenditure inflation of 3.3% this year and 2.5% in 2024.
Consequently, the world may, for a relatively long period, have interest rates that are high by the standards of the past 20 years. Banking strains and policy While it is clear that central banks prefer to address higher-than-desired inflation with interest rates, there is a possibility for financial stability concerns to cloud policymaking.