Tumbling U.S. inflation expectations another warning bell: NY Fed

Reuters/Jonathan Spicer/06-12-17

U.S. inflation expectations tumbled last month, with one key measure hitting its lowest level since early 2016, according to a Federal Reserve Bank of New York survey that could amplify the central bank’s concern over a broad slump in prices.

The survey of consumer expectations, an increasingly valuable gauge for the Fed, showed on Monday that median three-year-ahead inflation expectations fell to 2.47 percent last month, from 2.91 percent in April. That brought the measure to a 16-month low after it had hovered near a record high the last six months.

PG View: Falling inflation expectations has to be particularly vexing to the Fed, after a nearly a decade of near-zero rates and trillions spent on asset purchases with the expressed goal of generating inflation.

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