The Washington Post

Consumers show less concern over inflation


Americans’ expectatio­ns for the near-term path of inflation ebbed to nearly a two-year low last month, which could take pressure off the Federal Reserve to raise rates amid fresh uncertaint­ies created by turmoil in the U.S. banking system.

It’s the first of a run of key readings on inflation, consumer spending and sentiment that could affect whether the central bank hikes interest rates or pauses to measure the fallout from bank failures.

The New York Fed’s Survey of Consumer Expectatio­ns on Monday showed that respondent­s said inflation would stand at 4.2 percent a year from now.

That’s a notable drop from the 5 percent expectatio­n in January and the lowest reading since the 4 percent registered in May 2021.

Meanwhile, the expected level of inflation three years from now held steady at 2.7 percent, matching the level last seen in October 2020, while expected inflation five years from now was seen hitting 2.6 percent, up from January’s 2.5 percent.

The New York Fed survey arrived just ahead of the Fed’s March 21-22 policy meeting. Until this past weekend, the gathering had widely been expected to result in an interest rate increase, as the central bank presses forward with its effort to cool high levels of inflation.

But the failure of Silicon Valley Bank, which forced government authoritie­s to offer new liquidity support to the banking system, has scrambled the monetary policy outlook.

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