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U.S. consumer short-term inflation outlook rises modestly: NY Fed survey

Kitco News

WASHINGTON (Reuters) - U.S. consumers’ inflation expectations one year from now rose modestly in December, according to a Federal Reserve Bank of New York survey published on Monday.

The survey of consumer expectations, one of the Fed’s price gauges as it weighs how long to leave interest rates unchanged, showed one-year ahead median inflation expectations rose 0.1 percentage point to 2.5% while they were unchanged over a three-year outlook, also at 2.5%.

Stable and low inflation is one of the main goals of the U.S. central bank. It cut interest rates three times last year to help shield the U.S. economy from slowing global growth and the effects of the U.S.-China trade war.

The Fed currently sees interest rates remaining unchanged for the foreseeable future, in part because there are few signs that inflation is about to surge. The Fed’s preferred measure of inflation has consistently undershot its 2% target rate over the past several years.

Fed policymakers have instead begun to worry about the possibility that inflation expectations have become anchored at too low a level, which in itself could pose risks to the U.S. economy. In October, both inflation outlooks in the New York Fed survey fell to their lowest since the series began in 2013, at 2.3% and 2.4% over a one-year and three-year ahead horizon, respectively.

Elsewhere, the New York Fed survey showed that the median expectations for house price changes, earnings growth, unemployment and income growth remained unchanged last month.

The average perceived probability of missing a minimum debt payment over the next three months increased from 11.3% to 12.5%, above its 12-month average of 11.5%.

The internet-based survey taps a rotating panel of 1,300 households.

Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci

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