Most Governors and Reserve Bank Presidents foresee that economic growth this year will slow to a 2½ to 3 percent rate. Such growth would keep the unemployment rate about unchanged. The central tendency of the Governors’ and Presidents’ predictions of CPI inflation is 2 to 2½ percent.
This level represents a pick-up from last year, when energy prices were falling, but it is in the vicinity of core CPI inflation over the last couple of years. This outlook involves several risks. The continuing downside risk posed by possible economic and financial instability around the world was highlighted earlier this year by the events in Brazil.