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SF Fed: Inflation Expectations More Prominent Role In Wage-Setting

FED
  • SF Fed research (link) finds that "since the pandemic, inflation expectations have been playing a more prominent role in wage-setting dynamics than in the past. Moreover, the influence of inflation expectations is being felt over a longer period of time. The longer inflation and inflation expectations remain elevated, the higher and longer-lasting the pressures on wage growth are likely to be" - first chart.

Source: SF Fed


  • To this effect, the recent cooling in surveyed long-term measures of consumer inflation expectations will be welcomed, but long-term market measures such as the 5Y5Y breakeven have trended higher since mid-July to 2.35% despite the climb in 10Y real yields.

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