MNI: NY Fed: 3-Year Ahead Inflation Expectations Rise To 3.9%

U.S. consumer expectations for inflation three years from now rose two-tenths to 3.9% in April, according to the latest New York Fed survey, while expectations at the one-year horizon fell three-tenths to 6.3% as gas prices declined last month.

"While both series remain elevated, they are 0.3 percentage point below their series highs," the Fed bank said.

Fed officials are carefully watching longer-term inflation expectations for signs of a sustained rise. Richmond Fed President Tom Barkin told MNI on Friday he would not rule out a 75 bp rate hike if expectations look to be getting out of hand.

Expectations for the year-ahead rise in the price of gasoline fell sharply in April by 4.4 pp to 5.2%. The expected change in the price of food and medical care edged down to 9.4% and 9.5%, respectively.

The median expected change in rent rose by 0.1 pp to 10.3%, a new series high, while median home price expectations were unchanged at 6.0% "but remain elevated relative to pre-pandemic levels," the survey said.

Median inflation uncertainty rose to a new series high at the short-term horizon and was unchanged at its series high at the medium-term horizon, according to the survey.