NEW YORK, Dec 11 (Reuters) – The path U.S. consumers expect inflation to take next year softened in November to the lowest level in more than two years, amid a pullback in projections of higher fuel and rent costs, a New York Federal Reserve survey showed on Monday.
Consumers expect inflation to be 3.4% a year from now, below October’s expectation of 3.6% and the lowest reading since April 2021, the regional Fed bank said in its latest Consumer Expectations Survey . The report shows that three and five-year inflation remained stable at 3% and 2.7%, respectively.
Amid the short-term decline in inflation expectations, those surveyed by the New York Fed also saw slight increases in fuel and rent costs.
The increase in fuel costs stood at 4.5% a year from now, below the 5% forecast in October, while rents stood at 8%, below the 9.1% forecast in October. Rent growth expected a year from now is the lowest since January 2021.
The New York Fed released the survey a day before the start of the US central bank’s final two-day policy meeting in 2023.
Financial markets expect the Fed to keep its benchmark overnight interest rate unchanged in the range of 5.25%-5.50%. The main reason the Fed is likely to keep credit costs stable is due to falling real inflationary pressures, as inflation retreats toward the central bank’s 2% target.
The decline in expected inflation is likely to strengthen Fed policymakers’ desire to keep rates unchanged, as the central bank collectively believes that expected increases in inflation have strong gravity in the current that situation.
The decline in inflation expectations confirmed by the New York Federal Reserve is supported by data published on Friday by the University of Michigan, which also confirms a sharp decline in inflation expected by the public a year from now, from 4.5% in November to 3.1% in December.
In a press conference after the Fed’s latest monetary decision in early November, its chairman, Jerome Powell, said that amid rising inflation in recent years, readings showing relatively contained inflation expectations give the agency authority to be confident that it will return to its 2 % target.
The New York Fed’s report also found what it called “mixed” expectations for the labor market, with projections of a moderation in income gains and more concern about job losses, although there were fewer fears about rising unemployment. rates.
The regional Fed bank also noted that the financial assessments of households were largely unchanged in November, in terms of current views and expectations.