INFLATION LIKELY TO STAY STRONG AS RECOVERY SLOWS, BOA SAYS

The U.S. economic recovery has peaked and, beginning in July, will moderate as shortages and inflation curb consumer spending, Bank of America (BOA) said in an 18 June research note.
The GDP expanded 11 percent in this year’s second quarter, will grow by 9 percent in the third quarter, and 5 percent in the fourth, the bank’s research team said.
The bank now agrees with the U.S. Federal Reserve’s forecast that the U.S. economy will grow 7 percent overall this year and pegs 2022’s expansion at 5.5 percent, up from its earlier estimate of 3 percent.
Growth in 2023 will be 2.2 percent for the U.S. but 3.7 percent globally as emerging nations’ recoveries begin to catch up with the developed world, according to BOA.
The U.S. inflation rate will range from 2 to 4 percent for two to four years, the bank predicted, also forecasting that the U.S. Federal Reserve will raise interest rates before 2022 unless American financial markets crash in the meantime.
Higher inflation, tighter policies by the world’s central banks, and slowing economic growth will be key indicators of coming changes in Fed policy, Michael Hartnett, the bank’s chief strategist, wrote in the note.