Bernanke Model Flags Sizzling Summer for U.S. Inflation

Bernanke Model Flags Sizzling Summer for U.S. Inflation

Bloomberg Economics has dusted off an academic model from former Federal Reserve Chair Ben Bernanke and used it to forecast the outlook for U.S. inflation. The results suggest the consumer price gains will touch 4.8% year on year in May and hold there through August before easing back to 3.7% at year-end -- supporting the “transitory” inflation view. Yet uncertainty around the model’s forecast is elevated and a 70% uncertainty band around the central forecast flags a distinct possibility: the CPI could peak above 5.5%, and still be close to 5% at year-end.

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