NY Fed: March Consumer Inflation Expectations Highest Since Mid-2104
By Michael S. Derby
Americans' expectations for the inflation over the next few
years hit its highest level last month since March 2014, amid
surging expectations for housing related costs, the Federal Reserve
Bank of New York said Monday.
In the bank's Survey of Consumer Expectations for March, those
polled said they see inflation a year from now at 3.2% and at 3.1%
three years from now. Both readings were up 0.1 percentage points
Amid the jump in overall expected inflation, projected home
price increases a year from now booked a 0.8% percentage point rise
to a series high 4.8% gain. Expected rental costs and gasoline
prices also hit the highest level of expected gains in the history
of the New York Fed survey.
Amid the jump in expected price pressures, survey respondents
also project higher incomes and spending. An expected rise in
income was at its highest level since January 2020, before the
coronavirus pandemic took hold, while anticipated spending levels
were at their highest reading since December 2014.
The New York Fed report also said "perceptions about households'
current financial situations compared to a year ago improved
slightly in March with fewer respondents reporting being worse off
than they were a year ago."
The bank's report arrives as the U.S. economy is widely expected
to enjoy a year of very strong growth as the nation emerges from
the pandemic. The Fed and broader government have acted with
historic force to aid the recovery and that has driven concerns,
especially among market participants, that a long period of very
low inflation relative to the Fed's 2% target may be about to give
way toward notably higher levels of price increases.
As part of the Fed's new monetary policy framework, officials
now actively seek inflation pressures that will overshoot their 2%
target to make up for the long periods they've fallen short of that
goal. Fed officials also have said they expect to see a jump in
inflation pressures over the next few months, but they don't
foresee an enduring rise in inflation.
At the Fed's most recent monetary policy meeting last month,
officials penciled in no rise in the central bank's short-term rate
target through their 2023 forecasting horizon. In a television
interview aired Sunday, Federal Reserve Chairman Jerome Powell said
an increase in rates this year was "highly unlikely," and in an
appearance last week, the central bank chief noted the Fed would
act if it saw a problematic increase in inflation.
"If it turned out that inflation, and particularly inflation
expectations, were to move up materially in a way that suggested
that they were being de-anchored and that inflation might move
persistently well above 2%, we would react, of course, that would
be our job," Mr. Powell said on Thursday.
Write to Michael S. Derby at email@example.com
(END) Dow Jones Newswires
April 12, 2021 11:35 ET (15:35 GMT)
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