NY Fed Finds Moderating Near-Term Inflation Expectations in June

  • According to a Federal Reserve Bank of New York report, the path U.S. inflation is expected to follow over coming years generally softened in June amid retreating projections of price increases for a wide array of consumer goods and services.
  • Inflation a year from now was seen at 3% as of June, from the expected rise of 3.2% in May, while three years from now, inflation was seen at 2.9% from May’s 2.8%, according to the bank’s latest Survey of Consumer Expectations. Inflation five years from now was seen at 2.8% from May’s 3%.
  • The report found that expected price gains for gas, food, rent, medical, and college costs all moderated in June relative to what survey respondents projected in May. Expected year ahead home price gains also cooled, hitting 3% in June from the prior month’s 3.3%.
  • Ebbing price pressure expectations came in a landscape where survey respondents said they see future earnings growth rising at a faster pace and future income growth slowing. Spending expectations held steady at a pace above where it was before the coronavirus pandemic struck. The survey also found respondents saying credit is getting slightly harder to get as they also marked down their household’s financial situation. Respondents' outlook on the job market was mixed.
  • The New York Fed report, which is closely watched for what it says about how the public foresees inflation developing, came as central bankers are actively debating whether inflation pressures have moderated enough to allow them to cut their short-term interest rate target.

(Source: Reuters)