NY Fed survey finds stability in January inflation expectations
By Michael S. Derby
NEW YORK (Reuters) -Americans reported a fairly stable outlook for inflation at the start of the year, as medium-term expectations settled back to levels last seen before the coronavirus pandemic struck, amid notable declines in the projected rises for a number of key spending areas.
The Federal Reserve Bank of New York said Monday in its January Survey of Consumer Expectations that inflation a year and five years from now were unchanged at readings of 3% and 2.5%, respectively, while the projected rise in inflation three years from now dropped to 2.4%, the lowest since March 2020, from December’s 2.6%.
The report found a broad retreat in where the public expects future price rises to go for a range of key areas. The year- ahead expected rise for gasoline hit its lowest reading since December 2022, while the year-ahead increase in food was at its lowest point since March 2020, the onset of the coronavirus pandemic, and the expected rise in rent hit its lowest reading since December 2020.
The New York Fed data on inflation expectations comes after the Fed’s most recent policy meeting, which held short-term interest rates steady while opening the door to cutting them at some point later this year due to falling inflation pressures. Fed officials’ confidence that they are on a path back to 2% inflation is in part buttressed by a trend of retreating inflation expectations readings, which officials believe have a strong influence on what will actually happen with price pressures.
The Fed's preferred price pressure gauge, the personal consumption expenditures price index, was up by 2.6% in December from the same month a year ago. That measure has been steadily falling back to the central bank target and
Read more on investing.com
