IMF's Gopinath Sees Risk Of De-Anchoring U.S. Inflation Expectations

• 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. 
• This means that based on current projections of what the interest rate path may be, inflation will stay above the Fed's 2% target "for a long time”. 
• Gopinath also spoke of an "incredibly narrow" path that would allow for the tightness in goods and labour markets to unwind without rates rising much more. However, she said, "overall, the risks are towards the possibility that this will require much steeper increases in rates." 
• The Fed has raised rates twice so far this year and 50-basis point hikes are priced in for both its meeting next week and the following one in July.
• U.S. Treasury Secretary Janet Yellen said separately on Wednesday that the current annual inflation rate of 8% is "unacceptable" for the United States and 2% is an "appropriate target."

(Source: Reuters)