Fed to remain ‘worried’ about inflation if job market remains red-hot: Ben Levisohn
Barron’s Roundtable panel welcomed Carleton English, Ben Levisohn, and Andrew Bary to provide professional analysis of the recent market rally as investors start to see signs of cooling inflation.
Americans are bracing for higher inflation in the short, medium and longer terms, a monthly survey shows. However, they see the rate of price increases moderating over time.
The latest read on consumer inflation expectations by the Federal Reserve of New York shows:
Inflation Expectations Jump
One-year inflation expectations increased by 0.5 percentage points to 5.9%
Two-year inflation expectations went up by 0.2 percentage points to 3.1%
Five-year inflation expectations rose by 0.2 percentage points to 2.4%
The deterioration in the expected path of inflation last month may create new challenges for the Federal Reserve, which is now engaged in a very aggressive campaign of rate rises aimed at lowering price pressures from their highest readings in 40 years back to the official 2% target.
Central bank officials contend that where the public sees inflation in the future has a strong influence on current inflation readings. The relative stability of expected levels of inflation, mainly over longer horizons, has given central bank officials confidence that the public retains faith in the Fed to get inflation down over time.
Gas price gloom
The October survey further showed expectations for home price growth were unchanged, while Americans think gas prices will increase sharply. The median expected change in gas prices rose by 4.3 percentage points to 4.8% — the largest one-month increase on record.
AAA says the average price for gas is $3.77 per gallon, down from $3.80 last week, but up 36 cents from a year ago.