Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. consumer inflation outlook declined as Fed weighed rate cuts: survey

EconomyAug 12, 2019 11:34AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: FILE PHOTO: FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington

NEW YORK (Reuters) - Consumers in the United States kept their expectations of inflation restrained in July, data showed on Monday, validating concerns that prompted the Federal Reserve to start cutting interest rates.

The Federal Reserve Bank of New York's survey of consumer expectations showed that people's average outlooks for inflation declined by 0.1 percentage point to 2.6% over both one- and three-year time horizons. Uncertainty about inflation also fell.

At the end of July, the Fed cut rates for the first time since 2008, citing a witches' brew of economic concerns, including the U.S.-China trade war. One other issue is that inflation has failed to reach the Fed's 2%-a-year target for a sustained period. The Fed's preferred inflation gauge, known as the core personal consumption expenditures price index, gained at an annualized 1.6% pace in June.

If people expect inflation will remain lower than the Fed's target, policymakers lose credibility. Low inflation also makes it more likely that interest rates will fall near zero and lose their ability to encourage further economic activity. The Fed currently targets short-term rates between 2.00% and 2.25%.

Markets are betting the Fed will have to cut rates again as soon as its meeting next month. The New York Fed's inflation survey, based on a rotating panel of about 1,300 heads of households, is one gauge the Fed considers along with other data on price pressures. The record-low reading on records dating to 2013 is around 2.4%.

Overall, consumers report a reasonably cheery view of their own financial situation, with a largely stable view of the price hikes they expect to see in medical care and rent even though they see even higher gasoline and college education prices than they did the last time the survey was taken.

A third of consumers say they are somewhat or much better off than a year ago, while about half see themselves in the same spot. More than 44% see their financial lives improving over the coming year.

A higher proportion of those consumers, 41.1%, also see U.S. stock prices rising over the coming year. The figure was 38.8% in June, when stock markets welcomed the Fed's signals that rate cuts were on the way.

Interactive graphic: Stuck in low gear? U.S. consumer inflation expectations - https://tmsnrt.rs/2Z0C3en

U.S. consumer inflation outlook declined as Fed weighed rate cuts: survey
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Silverbug 19
Silverbug 19 Aug 12, 2019 4:27PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
As everything rises in price in order to survive.
Jon PN
Jon PN Aug 12, 2019 2:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
convenient to determine consumer inflation without calculating in real consumer spending on things such as food and fuel (auto & home). The real inflation is over 12%
Tom OKray
Tom OKray Aug 12, 2019 12:08PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
People think inflation will be 2.6% which is over the 2% Fed target, therefore the Fed should not have reduced rates.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email