- Decline in inflation expectations: 1-year inflation forecast fell to 3.2% (from 3.6%), 3-year to 3%, and 5-year to 2.6%
- Improved labor market sentiment: Perceived risk of job loss decreased, and there was a slight rise in confidence among those planning to switch jobs
- Reduced concerns about debt: Lowest perceived probability of missed debt payments since January
- Food prices still a concern: Food inflation forecast at 5.5% — the highest since October 2023
- Weaker home price growth expectations: 3% versus 3.3% in April
- Consumers more optimistic about personal finances and credit access
- The Fed is likely to keep interest rates at 4.25–4.5% at the June 17–18 meeting
The New York Fed has just released a report surveying market sentiment. In May, U.S. consumers became more optimistic — inflation expectations declined across all time horizons, and outlooks on the labor market and personal finances improved. Expected inflation one year from now is 3.2% (down from 3.6% in April), and five-year expectations are at 2.6%. While food prices remain a worry (with a projected inflation of 5.5%), Americans expect slower price growth in fuel, rent, medical services, and education.
At the same time, concerns about missing debt payments are at their lowest since January, and perceived job security has slightly improved. These changes come amid President Trump’s unstable tariff policies, but markets interpret the softer inflation expectations as a sign that lasting price pressures have not yet taken hold. The Fed is expected to hold rates steady in June while monitoring consumer data for signs of entrenched inflation.
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Create account Try a demo Download mobile app Download mobile appThe U.S. CPI inflation report for May will be released this Wednesday before the opening bell on Wall Street. EURUSD is up 0.25% today, and the U.S. dollar is among the weakest G10 currencies. Capital is flowing primarily into precious metals and cryptocurrencies, with slight gains also seen in the stock market.
Source: xStation 5
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