Edited excerpts:
As was widely anticipated, the US Federal Reserve raised its benchmark interest rate by 25 bps as it grapples with stubborn inflation amid a rebound in crude oil prices. What is your forecast for US inflation this year, and do you see upside risks?
Our 2026 core PCE (personal consumption expenditures) deflator forecast is at 3.3%. If crude oil prices remain elevated amid the ongoing geopolitical tension, there can be an upside risk. However, currently we believe the underlying inflation—as measured by our super core (CPI services excluding housing, energy and airfares)—is well within the range seen in the 2010s and has dropped sharply in recent months.
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