【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 and 5 years remain at 3%, unchanged from last month. This data indicates that although recent inflation has slowed month-on-month, public expectations for medium-term inflation have not cooled correspondingly, 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 key long-term inflation "anchoring" indicators monitored internally 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' expectations for future price increases have not returned to the 2% policy target range, which could influence wage setting, corporate pricing, and other behaviors, thereby exerting sustained pressure on actual inflation.
📈 What does this mean for Federal Reserve policy?
This data may provide support for the "hawkish" stance within the Federal Reserve, backing their position of "not rushing to cut rates, requiring more patience." If consumer inflation expectations are difficult to substantially 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 prolonged high-interest rate environment will suppress valuations, especially for growth assets that do not have stable cash flows.
For the dollar, the delay in rate cut expectations may provide support for the exchange rate.
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