JULY 14, 2025 – INFLATION FORECASTS RETREAT
The New York Fed’s Survey of Consumer Expectations reported its respondents predict inflation will be at 3 percent a year from now, the same level as anticipated in January. Fears of the government tariffs causing a spike in inflation seem to have disappeared. This is a 0.2 percent decline from May, and well below the 3.6 percent expected in April and May.
The tariffs have not yet shown up in the monthly inflation readings, with the annual inflation rate currently running at 2.4 percent. Inflation expectations are for 3 percent for a 3-year horizon and 2.6 percent for a 5-year outlook. Employment metrics improved in the survey as well, fewer people think the unemployment rate will worsen a year from now, and the expectation to lose one’s job fell to the lowest reading since December.
The Fed will meet the last week of July. It’s unclear if the data is strong enough for them to lower interest rates this month.