US one-year inflation expectations rise to 3.9% — CNBC
In the United States, median consumer inflation expectations for the next 12 months rose to 3.9% in September. This is 0.3 percentage points higher than in August and the highest reading since May 2023, when it stood at 4.1%, CNBC reports, citing the Federal Reserve Bank of New York's monthly survey.
Spending expectations also rose
According to the Survey of Consumer Expectations, households expect their spending to increase by 5.5%. This is also 0.3 percentage points higher than in the previous month and the highest level since May 2023.
At the same time, longer-term inflation expectations changed less significantly. The three-year outlook rose by 0.1 percentage points to 3.3%, while the five-year outlook remained at 3%.
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Markets expect rates to remain unchanged
The survey results were released amid discussions among Federal Reserve officials about the appropriate level of interest rates. Inflation in August came in below expectations according to the measure preferred by the Fed.
Markets largely expect the Federal Open Market Committee to leave the benchmark rate unchanged at its meeting later in October. New York Federal Reserve Bank President John Williams and other officials have said in recent days that the regulator can take its time in assessing the necessary level of rates.
At the same time, the five-year inflation expectations measure derived from the bond market is near its highest level this year, at 2.35%. Federal funds rate futures indicate an expected level of 5.58% in five years, while the current target range is 3.75–4%.
