US Inflation Expectations Plummet to 2-Year Low, NY Fed Survey Reveals

Americans' inflation expectations have fallen to the lowest level in two years, according to a survey by the Federal Reserve Bank of New York. The median expectation is that inflation will be up 3.4% one year from now, down from a high of 7.1% recorded in June 2022. However, consumers anticipate that it will take longer for price growth to slow in the longer term, projecting inflation to hover around 3% three years from now and at 2.7% five years from now. This indicates that sticky inflation could persist, remaining above the Federal Reserve's 2% target. The survey plays a critical role in determining how Fed policymakers respond to the inflation crisis, as actual inflation depends, in part, on consumer expectations.