Inflation will remain high this year but will subside over the next five years - Federal Reserve of New York

Inflation will remain high this year but will subside over the next five years – Federal Reserve of New York

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(Kitco News) — While inflation pressures may have peaked at a 40-year high, consumers don’t expect prices to fall anytime soon, according to the latest data from the New York Federal Reserve.

In a blog Thursday, the regional central bank released the results of its latest survey of consumer expectations. According to the survey, consumers expect inflation to remain high during this year and its potential for the next three years.

With that said, the central bank appears to be taking a winning streak as long-term inflation expectations remain firmly entrenched.

“In contrast to first-year inflation expectations, which remain on an increasing trajectory, inflation expectations for the next three years have stabilized in recent months and even begun to decline slightly after reaching a peak of 4.2% in September and October 2021. Overview now at data points Few have the longer horizon, inflation expectations for the next five years have been remarkably stable in recent months and well below short- and medium-term inflation expectations,” analysts said in the report.

According to the report, consumers expect inflation pressure to stabilize above 6% this year. At the same time, the inflation rate is expected to decrease in the next three years to 4%. Finally, consumers see inflation steady at 3%.

“The results presented in this blog post provide further evidence that consumers still do not expect the current high inflation wave to continue long into the future,” the analysts said.

According to some economists, the Fed’s sharp talk about rising consumer prices has helped prevent long-term inflation expectations from becoming unchecked, which is partly affecting gold prices.

On Wednesday, the Federal Reserve, in the minutes of its May monetary policy meeting, reiterated its commitment to fighting inflation. The central bank indicated that it may raise interest rates by 50 basis points in the next two meetings.

However, some market analysts noted that there is still a lot of uncertainty about whether or not the US central bank will be able to engineer a soft landing that would calm inflation pressures but not push the economy into recession.

Some market analysts said that rising fears of stagflation will continue to support gold prices. The precious metal has struggled in the face of rising interest rates and the growing bullish momentum of the US dollar; However, sentiment has begun to shift with the precious metal still trading on both sides at $1,850 an ounce.

Edward Moya said: “Wall Street will wait to see what happens with inflation over the next couple of months, and that could mean that gold may be ready for a short-term consolidation phase, with $1839 providing initial support and $1870 being the maximum.” , chief market analyst at OANDA, in a note on Thursday.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect the opinions of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot. Nor does the author guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to conduct any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article will be liable for losses and/or damages arising from the use of this publication.

2022-05-26 19:54:00

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