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MNI INTERVIEW: Firms' Price Expectations May Be 'Unanchoring'

(MNI) Washington

More firms expect inflation to exceed 5% over the longer run, according to the Atlanta Fed's latest survey.

More firms now expect inflation to exceed 5% over the longer run than any other outcome, according to the Atlanta Fed's latest business inflation expectations survey, a "worrisome" development in a high inflation environment, bank economist Brent Meyer told MNI.

The quarterly survey question asks businesses to assign a percent likelihood to their unit costs rising less than 1%, between 1% and 3%, between 3% and 5%, and more than 5% over the next five to 10 years. In June, 31% of firms surveyed marked "more than 5%," up from 24% in March and just 13% in December 2020.

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More firms now expect inflation to exceed 5% over the longer run than any other outcome, according to the Atlanta Fed's latest business inflation expectations survey, a "worrisome" development in a high inflation environment, bank economist Brent Meyer told MNI.

The quarterly survey question asks businesses to assign a percent likelihood to their unit costs rising less than 1%, between 1% and 3%, between 3% and 5%, and more than 5% over the next five to 10 years. In June, 31% of firms surveyed marked "more than 5%," up from 24% in March and just 13% in December 2020.

Keep reading...Show less