According to recent survey results from the Federal Reserve Bank of New York, consumers anticipate lower inflation in the months ahead.
Consumers’ median inflation forecasts for the upcoming year and the following three years were 5.2% and 3%, respectively, in November. This is below than the median predictions of 5.9% and 3.1% for October.
According to the New York Fed, it represents the steepest month-to-month decline in year-ahead inflation predictions since the Survey of Consumer Expectations’ debut in 2013.
According to the Fed study, expectations for inflation in five years have decreased by 0.1 percentage points to 2.3%.
The Fed is keeping a tight eye on consumers’ inflation expectations as it fights a long struggle to lower high prices. A rise in salary negotiations among employees could result in higher inflation expectations, which would raise prices.
Additionally, the survey revealed a rise in respondents’ opinions on the labor market. The average perceived probability of obtaining a job rose while the average perceived probability of voluntarily leaving a job decreased, and the average predictions for increasing unemployment fell by 0.7 percentage points to 42.2%.
The New York Fed highlighted that consumer expectations for household income growth reached a series high. Expectations for home price growth, meanwhile, kept falling.
When officials gather for their final policymaking meeting of the year on Tuesday and Wednesday, the Fed is likely to closely examine this information as well as Tuesday’s most recent Consumer Price Index data. For the third time in a row, the central bank is predicted to increase its benchmark lending rate. A half-point rate increase is what economists are predicting.