<p>Based on your question on money stack exchange, your main interest seems to be I bonds. Insofar, the series of interest is <a href="https://www.usinflationcalculator.com/inflation/consumer-price-index-and-annual-percent-changes-from-1913-to-2008/" rel="nofollow noreferrer">this series</a>; look at the section</p>
<blockquote>
<p>Finally, the next grouping of data shows actually CPI figures from
1913 to present.</p>
<p>All Urban Consumers – (CPI-U) 1913-2022*</p>
</blockquote>
<p>The latest data:</p>
<p><a href="https://i.sstatic.net/1NMAV.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/1NMAV.png" alt="enter image description here" /></a></p>
<p>According to this series, the U.S. actually experienced deflation from October to November because the value went down from 298.012 to 297.711, hence -0.1%. This is also what the <a href="https://www.bls.gov/news.release/pdf/cpi.pdf" rel="nofollow noreferrer">official source computes</a>.</p>
<p><a href="https://i.sstatic.net/JB007.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/JB007.png" alt="enter image description here" /></a></p>
<p>Annualized, this would be -1.2%. Unrealistic, but bear in mind that this is for all items, including food and energy and non-seasonally adjusted. The forecasts from the FED, as well as the inflation breakeven rates provided in other answers are better suited to get an idea of expectations. You can read some details about inflation expectations and breakeven rates <a href="https://quant.stackexchange.com/a/65713/54838">here</a>.</p>

CC BY-SA 4.0
2023-01-07T23:16:38.747Z
2023-01-08T00:00:16.063Z
2023-01-08T00:00:16.063Z
AKdemy
<p>As of Jan 7th 2023 the bond market thinks we are almost there already.  Inflation breakevens for the next 2yrs are in the 2-2.5% range.  Furthermore, the 7% number you are quoting is rather misleading because it is backward looking - that is the amount of inflation that occurred over the last 12 months.  The most recent monthly reading was 0.2% for November which translates to a 2.4% annual rate.  To summarize, we think we are currently running at about 2.5%.  It is a good question as to whether we can get down below this to 2% but the main point is there’s a lot of evidence we are nearly there.</p>

CC BY-SA 4.0
2023-01-07T22:46:01.927Z
Thanks. What do you mean by "As of Jan 7th 2022 the bond market thinks we are almost there already"? What does the bond market have to do with inflation? What do you mean by inflation breakevens for the next 2yrs are in the 2-2.5% range? Do you have evidence for "The most recent monthly reading was 0.2% for November which translates to a 2.4% annual rate."?
HelloDarkWorld
CC BY-SA 4.0
2023-01-08T13:44:35.213Z
What does the bond market have to do with inflation?? Everything, the inflation outlook is probably the most important consideration that determines bond yields.  In particular, the market for US Treasury Inflation protected securities (Tips) gives direct information about the market outlook for inflation.
dm63
CC BY-SA 4.0
2023-01-08T13:49:22.063Z
Here’s a reference discussing the November monthly data https://tradingeconomics.com/united-states/inflation-rate-mom
dm63
CC BY-SA 4.0
2023-01-07T22:28:58.177Z
2023-01-08T13:40:07.710Z
2023-01-08T13:40:07.710Z
dm63
<p>According to <a href="https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20221214.htm" rel="nofollow noreferrer">Fed</a> own forecasts inflation should reach 2% shortly after 2025. Note this is forecast and a best estimate, it’s impossible to actually know how long that could take if there are new macroeconomic perturbations or policy changes etc.</p>
<p><a href="https://i.sstatic.net/iDzRW.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/iDzRW.jpg" alt="enter image description here" /></a></p>

CC BY-SA 4.0
2023-01-07T22:44:02.057Z
Thanks. Which row and column should I look for "According to Fed own forecasts inflation should reach 2% shortly after 2025"?
HelloDarkWorld
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2023-01-07T22:59:56.693Z
@HelloDarkWorld, there is a row that is called inflation!
AKdemy
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2023-01-07T23:47:15.753Z
Ok, I'll use the core PCE inflation, since it should reach 2% shortly after 2025. Does that mean there is a possibly that the Fed could keep raising interests rate until at least 2025?
HelloDarkWorld
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2023-01-07T23:58:48.787Z
@HelloDarkWorld the interest rate Fed believes it will use in these years is in the last two rows of the table. Fed projects it will increase interest rate in 2023 and afterwards it will decline. Fed can always change it’s mind though
1muflon1
CC BY-SA 4.0
2023-01-08T03:47:28.787Z
From your picture, I've noticed that the Fed fund rate is projected to decrease over time from 2023 to 2025, yet the inflation is also projected to decrease from 2023 to 2025. So does that mean lowering the interest rate by the Fed (from 5.1 to 3.1 for Fed fund rate) also lead to lowering of inflation (from 3.5 to 2.1 for core PCE inflation)?
HelloDarkWorld
CC BY-SA 4.0
2023-01-08T10:41:29.197Z
@HelloDarkWorld no lower interest rate increases inflation, but inflation also depends on other factors in the economy. So even if interest rate decreases inflation might also decrease if lets say output/employment drops below its potential level or if there are some changes to real interest rate etc. The table does not show any causal relationship you should read it that given the conditions they believe will hold in 2025 Fed will set 2.9% FFR and given all other factors at that time inflation is forecasted to be 2% (using sep projection), conditional on all other factors.
1muflon1
CC BY-SA 4.0
2023-01-07T22:29:31.907Z
2023-01-07T22:29:31.907Z
1muflon1
<p>If the Fed keeps raising interest (e.g. 0.5%) and vows to reduce interest rate to at least 2.00%, how long could that possibly take? Thanks.</p>

<inflation><interest-rate><federal-reserve>
Current US inflation rate is 7.1% and Fed vows to reduce it to at least 2.00%, how long could that possibly take?
HelloDarkWorld
# Current US inflation rate is 7.1% and Fed vows to reduce it to at least 2.00%, how long could that possibly take?

(Asked by: username_0 on 2023-01-07)

If the Fed keeps raising interest (e.g. 0.5%) and vows to reduce interest rate to at least 2.00%, how long could that possibly take? Thanks.

**Tags:** inflation, interest-rate, federal-reserve

---

## 3 answers

### Answer by username_3 on 2023-01-07. Score: 3 | Accepted answer

According to [Fed](https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20221214.htm) own forecasts inflation should reach 2% shortly after 2025. Note this is forecast and a best estimate, it’s impossible to actually know how long that could take if there are new macroeconomic perturbations or policy changes etc.

[![enter image description here](https://i.sstatic.net/iDzRW.jpg)](https://i.sstatic.net/iDzRW.jpg)

> **Comments:**
> **username_0**: Thanks. Which row and column should I look for "According to Fed own forecasts inflation should reach 2% shortly after 2025"?  
> **username_1**: @HelloDarkWorld, there is a row that is called inflation!  
> **username_0**: Ok, I'll use the core PCE inflation, since it should reach 2% shortly after 2025. Does that mean there is a possibly that the Fed could keep raising interests rate until at least 2025?  
> **username_3**: @HelloDarkWorld the interest rate Fed believes it will use in these years is in the last two rows of the table. Fed projects it will increase interest rate in 2023 and afterwards it will decline. Fed can always change it’s mind though  
> **username_0**: From your picture, I've noticed that the Fed fund rate is projected to decrease over time from 2023 to 2025, yet the inflation is also projected to decrease from 2023 to 2025. So does that mean lowering the interest rate by the Fed (from 5.1 to 3.1 for Fed fund rate) also lead to lowering of inflation (from 3.5 to 2.1 for core PCE inflation)?  
> **username_3**: @HelloDarkWorld no lower interest rate increases inflation, but inflation also depends on other factors in the economy. So even if interest rate decreases inflation might also decrease if lets say output/employment drops below its potential level or if there are some changes to real interest rate etc. The table does not show any causal relationship you should read it that given the conditions they believe will hold in 2025 Fed will set 2.9% FFR and given all other factors at that time inflation is forecasted to be 2% (using sep projection), conditional on all other factors.  

---

### Answer by username_1 on 2023-01-07. Score: 2

Based on your question on money stack exchange, your main interest seems to be I bonds. Insofar, the series of interest is [this series](https://www.usinflationcalculator.com/inflation/consumer-price-index-and-annual-percent-changes-from-1913-to-2008/); look at the section

> Finally, the next grouping of data shows actually CPI figures from
> 1913 to present.
>
> All Urban Consumers – (CPI-U) 1913-2022\*

The latest data:

[![enter image description here](https://i.sstatic.net/1NMAV.png)](https://i.sstatic.net/1NMAV.png)

According to this series, the U.S. actually experienced deflation from October to November because the value went down from 298.012 to 297.711, hence -0.1%. This is also what the [official source computes](https://www.bls.gov/news.release/pdf/cpi.pdf).

[![enter image description here](https://i.sstatic.net/JB007.png)](https://i.sstatic.net/JB007.png)

Annualized, this would be -1.2%. Unrealistic, but bear in mind that this is for all items, including food and energy and non-seasonally adjusted. The forecasts from the FED, as well as the inflation breakeven rates provided in other answers are better suited to get an idea of expectations. You can read some details about inflation expectations and breakeven rates [here](https://quant.stackexchange.com/a/65713/54838).


---

### Answer by username_2 on 2023-01-07. Score: 2

As of Jan 7th 2023 the bond market thinks we are almost there already. Inflation breakevens for the next 2yrs are in the 2-2.5% range. Furthermore, the 7% number you are quoting is rather misleading because it is backward looking - that is the amount of inflation that occurred over the last 12 months. The most recent monthly reading was 0.2% for November which translates to a 2.4% annual rate. To summarize, we think we are currently running at about 2.5%. It is a good question as to whether we can get down below this to 2% but the main point is there’s a lot of evidence we are nearly there.

> **Comments:**
> **username_0**: Thanks. What do you mean by "As of Jan 7th 2022 the bond market thinks we are almost there already"? What does the bond market have to do with inflation? What do you mean by inflation breakevens for the next 2yrs are in the 2-2.5% range? Do you have evidence for "The most recent monthly reading was 0.2% for November which translates to a 2.4% annual rate."?  
> **username_2**: What does the bond market have to do with inflation?? Everything, the inflation outlook is probably the most important consideration that determines bond yields.  In particular, the market for US Treasury Inflation protected securities (Tips) gives direct information about the market outlook for inflation.  
> **username_2**: Here’s a reference discussing the November monthly data https://tradingeconomics.com/united-states/inflation-rate-mom  

---

