【New York Fed's Latest Survey: Medium-term Inflation Expectations Remain “Stubbornly” at 3%, Market Rate Cut Expectations May Need to Cool】
The latest consumer expectations survey released by the New York Fed shows that the median annual inflation expectations of respondents for the next 3 years and 5 years remain at 3%, unchanged from last month. This data indicates that, despite a recent slowdown in month-on-month inflation, public expectations for medium-term inflation have not cooled in tandem, demonstrating the “stubborn stickiness” of inflation expectations.
💡 Why is this data so critical?
The New York Fed's consumer inflation expectations survey is one of the long-term inflation “anchoring” indicators closely monitored by the Federal Reserve. When the 3-year and 5-year inflation expectations stabilize at a high level of 3%, it means that the public and businesses do not expect future price increases to return to the 2% policy target, which could significantly impact wage setting, corporate pricing, and other behaviors, thereby exerting continuous pressure on actual inflation.
📈 What does this mean for Fed policy?
This data may provide a basis for the “hawkish” faction within the Fed, supporting their stance of “not rushing to cut rates, needing more patience.” If consumer inflation expectations are difficult to materially reduce, the Fed may maintain high interest rates for a longer period to thoroughly reshape inflation expectations. The market's expectation of “multiple rate cuts in 2025” may face challenges.
⚠️ Market Impact:
For risk assets, a long-term high interest rate environment will suppress valuations, especially for growth assets without stable cash flows.
For the dollar, a delay in rate cut expectations may provide support for the exchange rate.
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