According to the latest Reuters poll of economists, the US Federal Reserve (Fed) could begin scaling back asset purchases in the first quarter of 2022, as its main concern remains that the core PCE inflation could hit the 2.8% threshold.  

Key takeaways

“That inflation gauge would have to rise as high as 2.8% to cause discomfort at the Fed, according to the median of 41 economists in response to an additional question in the May 10-13 poll. While forecasts ranged from 2.3% to a high of 4.0%, the most common response, or the mode, was 2.5%.”

“When asked how long the Fed would tolerate that high rate of core PCE inflation before it acts, 36 of 41 economists said three months at least.”

“Asked when the US unemployment rate would reach its pre-crisis levels, a majority of economists, or 35 of 50, said it would take over a year, including 15 predicting more than two years.”

“Asked when the Fed would start scaling back its $120 billion monthly asset purchases, a majority of economists, or 31 of 51, said in the first quarter of 2022, while 13 respondents said in Q4 this year.”