Bank of America: Oil price shocks may push up Fed inflation forecasts; Powell will emphasize a wait-and-see approach.

Bank of America stated that the Federal Reserve will have to deal with another supply shock—soaring oil prices. In the Summary of Economic Projections (SEP) released ahead of the March Fed meeting, both overall and core inflation forecasts are likely to be revised upwards. The Bank of America report stated, "If long-term growth expectations are also revised upwards, we expect the median dot plot of long-term interest rates to likely shift slightly upwards." In this scenario, the bank believes Fed Chairman Powell may acknowledge the risks of stagflation while emphasizing a wait-and-see approach. (Jinshi)