By Michael S. Derby
(Reuters) – The U.S. public’s outlook on the future path of inflation was mixed in May, according to a report on Monday from the Federal Reserve Bank of New York.
The bank found that as part of its monthly survey on the state of consumer expectations that the public believes inflation a year from now will be 3.2% compared with April’s expectation of 3.3%, while three years from now expected inflation held steady at 2.8%. Five years from now survey respondents see inflation at 3% from April’s projected 2.8%.
The survey also found that the expected rise in home prices held steady at 3.3% last month, while the year-ahead expected rise for gasoline prices was flat at 4.8%. Also unchanged relative to the prior month was an expected 5.3% rise in food prices and a 9.1% increase in rent. Future medical care costs were expected to be higher relative to the April reading.
The New York Fed report comes just ahead of the start of this week’s Federal Open Market Committee meeting. Officials are widely expected to keep their overnight interest rate target range unchanged at between 5.25% and 5.5% as they search for fresh evidence price pressures have cooled enough to allow them to lower rates.
Expectations of rate cuts for this year have wilted amid unexpectedly sturdy inflation. Fed officials believe the expected path of inflation has a strong influence on its current readings. They’ve said inflation expectations data shows the public remains confident the central bank will bring price pressures back to the 2% target.
The New York Fed also found in the report that the public’s assessment of its current financial situation improved in May amid flat views on credit accessibility. The survey also showed the mean perceived probability of stock prices being higher a year from now rose to the highest since May 2021.
The survey also found the public projecting a rising chance of higher unemployment levels a year from now.
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