US Consumer Inflation Expectations Slow Again, NY Fed Says

U.S. consumer inflation expectations fell further in August as gasoline prices extended their sharp decline from June’s record high, a development that should be welcomed by Federal Reserve officials, who are weighing the size of an interest rate hike to be promoted next week.

In August, consumers expected inflation to average 5.75% over the next 12 months, down from 6.2% in July, the lowest rate since October 2021, the New York Fed’s monthly consumer expectations survey showed on Thursday. Monday (12).

They also forecast an average annual increase of 2.8% in prices over the next three years – the slowest pace since the end of 2020 – after estimating inflation of 3.2% for that horizon in July.

These results may bring some relief to US central bankers, who fear that the highest inflation in 40 years could alter consumers’ perceptions of how persistent current price shocks will be, which would make the job of policymakers containing inflation even more difficult.

The Federal Reserve adopted two consecutive 75-basis-point rate hikes at its latest meetings, and futures pegged to the Fed’s base rate forecast a third increase of that magnitude at its meeting next week, on the 20th and 21st.