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NY Fed Survey Reveals General Expectations of Higher Inflation
By Michael S. Derby
(Reuters) – Americans braced last month for generally higher inflationary pressures in the coming years and accelerating increases in home prices, according to a report released on Monday by the Federal Reserve Bank of New York .
The bank said in its latest Consumer Expectations Survey that respondents project inflation a year from now at 3.3%, up from 3% in March, while inflation three years from now appears to moderate to an expected increase of 2.8%, compared to 2.9% in the previous month. Inflation five years ahead was estimated at 2.8%, compared to 2.6% in March.
The Fed’s inflation target is 2% and the personal consumption expenditures price index, the central bank’s preferred gauge of inflation, was at an annual increase of 2.7% in March, up from 2.5% in February.
In the survey, respondents also reported expecting high price pressures a year from now across all categories measured, including rent, food, gasoline and medical costs. The expected increase in house prices a year from now has reached its highest level since July 2022, with an increase of 3.3% compared to the 3% that prevailed in the previous seven months.
While the report found that respondents expected lower future earnings and income, it found a projection that future spending would increase. It also found that families were more concerned about their personal financial situation, although they were more optimistic about their access to credit. The survey also found mixed views on the job market, with the lowest level of respondents saying they could get a job if they lost it since April 2021.
The New York Fed’s report comes as the Fed is struggling to make sense of unexpectedly tight price pressures at the start of the year. This scenario is complicating authorities’ expectations that they would be able to reduce interest rates this year.
The rise in the expected short- and long-term price trajectory further challenges the outlook, as Fed officials and many private sector analysts believe that the direction the public expects inflation to go in the future exerts a strong influence on your situation. today.
In a separate report, the Cleveland Fed said inflation expectations among business leaders rose during the second quarter, with executives saying they see the consumer price index rising 3.8% next year, compared with a 3.8% gain. .4% that they projected in the first quarter.
(Reporting by Michael S. Derby; Editing by Andrea Ricci)