Americans’ expectations for inflation a year ahead fell to their lowest level in two years, as those same households said they expected tougher good times, according to a Fed report of New York published on Monday.
In its May survey of consumer expectations, the bank said respondents expected inflation a year from now to hit 4.1%, down from 4.4% in April. But the results are mixed when it comes to pressure on prices, since the level of inflation expected in three years is 3% in May, against 2.9% in April, while inflation in five years is expected to reach 2.7%, compared to 2.6% the previous month.
The survey revealed that respondents expected lower costs for food, rent, medical care and higher education over the next year, while the expected increase in the price of real estate marked a fourth consecutive month of increase. The expected increase in gasoline prices remained stable at 5.1% in May.
The New York Fed’s report comes just as central bankers are set to convene for a policy meeting that is expected to see them sidestep a rate hike for the first time since their aggressive tightening campaign began in March of Last year.
The Fed raised interest rates at a brisk pace to counter some of the worst inflation rates in decades. The cumulative impact of these increases, along with cooling price pressures and concern over the effects of higher rates on the financial system, has caused many central bankers to wait until after the Fed meeting, Wednesday, before proceeding with another rate hike. However, many economists expect one or two more rate hikes during the year.
Falling near-term expected inflation levels reduce pressure on the Fed to raise rates, as authorities have long viewed public inflation expectations as a strong influence on the current level of inflation. this one.
The New York Fed also found that respondents last month were somewhat more pessimistic about the borrowing outlook. “Respondents’ views on the future availability of credit have deteriorated slightly,” the report said, adding that “the share of respondents expecting credit conditions to tighten in a year’s time has increased, while that the share of those expecting an easing of credit conditions has declined”.
The survey found that households expected a slight improvement in income and a slight increase in future spending. At the same time, respondents slashed their expectations of a higher unemployment rate a year from now and the likelihood of losing a job in the coming year fell to its lowest level since April 2022.
2023-06-12 15:15:24
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