⌛ Did you miss ProPicks’ 13% gains in May? Subscribe now & catch June’s top AI-picked stocks early.Unlock Stocks

NY Fed survey finds waning near-term inflation expectations

Published 07/10/2023, 11:02 AM
Updated 07/10/2023, 11:07 AM
© Reuters. FILE PHOTO: People walk by the Federal Reserve Bank of New York in the financial district of New York City, U.S., June 14, 2023. REUTERS/Shannon Stapleton/File Photo

By Michael S. Derby

(Reuters) - Americans said in June they were expecting the weakest near-term inflation gains in just over two years, while continuing to mark up the expected path of home price increases, a survey from the New York Federal Reserve showed on Monday.

The New York Fed reported in its Survey of Consumer Expectations for June that respondents see inflation levels a year from now rising by 3.8%, down from the 4.1% gain expected in May. The June reading was the weakest since April 2021, and marked a three-percentage-point drop from the peak a year ago.

The inflation outlook at longer horizons, however, was mixed, with the projected level three years ahead holding steady at 3% but rising to 3% five years out from May's 2.7% reading. The Fed's inflation target is 2%.

The survey also found that expectations for future home price increases marked their fifth straight monthly improvement, retracing levels seen a year ago. Survey respondents foresee home prices rising by 2.9%, compared to the 2.6% rise expected in May.

The survey also found that respondents saw improved outlooks for their personal financial situations and for accessing credit.

But their view on the labor market was mixed. The number of respondents who said it was probable that they would lose their jobs in the next year rose to 12.9%, the highest reading since November 2021, while expectations that the overall unemployment rate would rise hit the lowest reading since April 2022.

Survey respondents also said they expected gasoline prices to fall while forecasting a rise in rental costs.

© Reuters. FILE PHOTO: People walk by the Federal Reserve Bank of New York in the financial district of New York City, U.S., June 14, 2023. REUTERS/Shannon Stapleton/File Photo

The survey was released as the U.S. Federal Reserve weighs its next step in an interest rate hiking campaign aimed at lowering high levels of inflation. Fed officials, who believe inflation expectations readings are a key driver of where inflation stands now, will likely be heartened by the drop in near-term expectations in the report.

The rise in the expected level of home price increases may worry the Fed. Some central bankers have noted the housing market may be bottoming out from the hit it took from the aggressive rate hikes that have pushed the U.S. central bank's benchmark overnight interest rate from the near-zero level in March of 2021 to the current 5.00%-5.25% range. Dallas Fed President Lorie Logan said last week that a rebound in the housing sector was a potential source of risk for future price pressures.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.