During an interview with CBS News on Friday, Bank of America chief economist Michael Gapen said it would “probably take two years, if not three years, to get inflation back to the Fed’s desired 2 percent level.”
Gapen said: “I think the numbers tell us the job market is still pretty hot. The unemployment rate number you mentioned is the lowest we’ve seen since 1968. So, that’s a five-decade low. 223,000 jobs added in December. That pace has slowed down, but it’s a robust number in any normal expansion. So, I think job seekers right now are probably still very successful, and I think the demand for jobs remains exceptionally strong.”
He added, “About 225,000 jobs a month is about twice as much job growth as I think the Fed would like to see.”
Host Catherine Herridge then asked: “The chairman of the Federal Reserve wants to see inflation at 2%. How long will it take to get there and how long will it take to get there?”
Gapen responded, “Most of us in the economic forecasting world think this is probably a 2-3 year journey, that we’re probably past peak inflation right now, in terms of year-on-year inflation rates. . They should start to decline more clearly in the course of 2023, but it will probably take two years, if not three years, to get inflation back to the 2% level desired by the Fed.
Follow Ian Hanchett on Twitter @IanHanchett