One-year inflation outlook in NY Fed survey rises to 3.9%, highest since May 2023
The New York Fed's September survey put the median one-year inflation outlook at 3.9%, up 0.3 percentage point from August and the highest since May 2023.
Key facts
- The New York Fed's September Survey of Consumer Expectations put the median one-year inflation outlook at 3.9%, up 0.3 percentage point from August, CNBC reported.
- That is the highest reading since May 2023, when the figure was 4.1%.
- Expected household spending growth rose to 5.5%, also up 0.3 percentage point and the highest since May 2023.
- Three-year inflation expectations rose 0.1 percentage point to 3.3%; the five-year view was unchanged at 3%.
- Markets largely expect the Federal Open Market Committee to keep benchmark rates steady at its meeting later in October, according to CNBC.
The New York Federal Reserve's monthly Survey of Consumer Expectations showed the median expectation for inflation over the next 12 months rose to 3.9% in September, CNBC reported on 7 October. That is up 0.3 percentage point from August and the highest level since May 2023, when the figure was 4.1%. Expected household spending growth rose to 5.5%, also up 0.3 percentage point and the highest since May 2023.
Longer-term expectations moved less, according to the survey. The three-year outlook rose 0.1 percentage point to 3.3%, while the five-year view was unchanged at 3%.
Fed officials are weighing how to set monetary policy as inflation holds well above the central bank's 2% target, according to CNBC. Markets largely expect the Federal Open Market Committee to keep benchmark rates steady when it meets later in October. Inflation in August came in lower than expected, according to the Fed's preferred gauge.
Several key officials, including New York Fed President John Williams, have said policymakers can afford to take their time when evaluating where interest rates should be set, according to CNBC. Fed funds futures contracts imply a rate of 5.58% in five years, CNBC reported. The current funds rate is targeted between 3.75% and 4%.
A closely watched bond market indicator known as a breakeven shows the five-year outlook at around 2.35%, its highest level of the year, CNBC reported. Treasury yields have hit levels not seen since the early part of the century, according to the report.
Context
The New York Federal Reserve publishes the Survey of Consumer Expectations each month, tracking what consumers expect for prices and spending. Fed officials consider those expectations a key driver for inflation, according to CNBC, and the central bank's inflation target is 2%.
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