MNI BRIEF: Inflation Expectations Similar to Recent Years -Fed

Inflation remains well below the Fed's 2% but inflation expectations have recovered to levels seen before the pandemic, according to the Federal Reserve's semi-annual report to Congress published ahead of testimony next week from central bank chair Jerome Powell.

"After declining sharply as the pandemic struck, consumer price inflation rebounded along with economic activity, but inflation remains below pre-COVID levels and the FOMC's longer-run objective of 2%," the report said. "Both total and core inflation were held down in part by prices for services adversely affected by the pandemic, and indicators of longer-run inflation expectations are now at similar levels to those seen in recent years."

MNI has interviewed current and former Fed economists who say the market's inflation concerns are worth watching given the amount of fiscal stimulus in the pipeline.