Inflation has peaked but remains higher than before the COVID-19 pandemic in 2023. That is a forecast made by David Mann, an expert at Mastercard Economics Institute (USA), in an interview with CNBC recently.
According to Mr. Mann, it will take several years for inflation to return to the level of 2019. Mr. Mann said that inflation has become a big challenge when it spiked and is still at a very high level. However, the expert also warned of the risk if central banks raised interest rates more than necessary.
Central banks of several countries raised interest rates last month to deal with high inflation, including the US, UK, Australia, Indonesia, Thailand, Malaysia, and the Philippines...
This week, Federal Reserve System (FED) is expected to meet on December 13 and 14 and raise interest rates by 0.5 percentage points. The Bank of England and the European Central Bank (ECB) are likely to decide on the same rate hike as the US this week.
Carol Kong, the currency strategist at the Commonwealth Bank of Australia, said there is little concern that inflation will remain high for a long time and this prompted the Fed to continue to apply tight monetary policy longer than expected.
According to Ms. Kong, high inflation is also a big concern of ECB officials before they enter the upcoming meeting. Meanwhile, Ms. Gita Gopinath, Deputy Managing Director of the International Monetary Fund (IMF), said that efforts to cool down inflation take time, and pointed out that there is a high risk if countries do not do much to achieve this goal.
According to Ms. Gopinath, many countries are facing a difficult policy choice when both tightening fiscal policy to deal with inflation and facing a cost-of-living crisis.
In the US alone, United States Secretary of the Treasury-Janet Yellen was optimistic about the country's inflation next year. In an interview with CBS on December 11, Yellen said that inflation in the US will fall and stay much lower by the end of 2023 if there is no unexpected shock.
United States Secretary of the Treasury said economic growth was slowing significantly, inflationary pressures were easing and she hoped the labor market remained "healthy". She also hopes that this year's sharp rise in inflation will not last long and that the US government has learned many lessons about the need to contain inflation after prices escalated in the 1970s.
United States Secretary of the Treasury also pointed out that many of the underlying causes of inflation are gradually being addressed. For example, transportation costs and prolonged delivery delays have decreased while gasoline prices have also dropped sharply.
According to the latest data, the consumer price index (CPI) in the US in October increased by 7.7% compared to the same period last year. This is the first time that the annual increase of CPI has fallen below 8% since February 2022, thereby sending a strong signal that inflation is slowing down in the US.