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LAST UPDATE:3/21/2024
CQM 20240322 CQM 20240322

Fed kept policy interest rate at 5.25%~5.50% on March 20 FOMC meeting. Since the economy is slowing down and inflation is rising as seen in graphs 1 and 2, it is difficult for the Fed to change policy interest rate. Based on CQM forecast of real domestic final sales and PCA forecast of economic growth, the economy seems to avoid negative growth in 2024Q1. Inflation is steadily increasing in 2024Q1 as both GDP price deflator and core PCE price deflator are growing at more than 3%. Headline inflation is also on an upward trend and is forecasted to grow at 2.88% in 2024Q1. However, the growth rate of headline inflation from the same quarter in the previous year is expected to be 2.44% in 2024Q1. Fed must wait for a while to change interest rates until they can judge which is more serious for the economy, economic slowdown or rising inflation.


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