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Public expectations of inflation over the next year moderated in April after hitting a record in the prior month, the New York Fed said Monday.
The regional Fed bank said that consumers see 6.3% inflation in April, down from 6.6% in last month’s survey.
Expectations for gas prices over the next year fell sharply in April, while expectations of college tuition and rent moved higher. The median expected increase in rent hit a new record high.
Over the next three years, consumer inflation expectations rose to 3.9% from 3.7% in March but remained below record levels.
Uncertainty about inflation rose to a new record high in April.
Fed officials believe that expectations about future inflation play a key role in the eventual path of the prices.
Consumer price inflation rose 1.2 in March, pushing the annual rate up to 8.5% rate. Many economists believe that this was the “peak” annual inflation rate for the cycle. The inflation data for April will be released on Wednesday. The consensus forecast of Wall Street economists is for a 0.2% gain.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, thinks the consumer price index will rise only 0.1% in April, which would bring down the annual inflation rate to 8%.
By the time of the Fed’s meeting in late July, there will be three straight monthly declines in inflation, Shepherdson said, which will allow the central bank “to be able to breathe more easily a good deal sooner than markets think.”
Stocks
DJIA,
SPX,
were trading lower Monday on concern that the Fed was going to have to be so aggressive to get inflation under control that they might cause a recession. The yield on the 10-year Treasury note
TMUBMUSD10Y,
remained above 3.10%.
