NEW YORK—U.S. inflation could remain above the Federal Reserve’s targets for a long time based on current projections, and there is a risk of inflation expectations “de-anchoring,” International Monetary Fund First Deputy Managing Director Gita Gopinath said on Wednesday.
Based on current projections of what the interest rate path may be, inflation will stay above the Fed’s 2 percent target “for a long time,” said Gopinath, speaking at an online event hosted by the Financial Times.
“That’s an environment that we’re not used to being in, you could risk their inflation expectations de-anchoring,” she said.
Gopinath spoke of an “incredibly narrow” path that would allow for the tightness in goods and labor markets to unwind without rates rising much more….