Despite Fed's Temporary Outlook, US 'Expected Inflation' Hits Record High

[Asia Economy New York=Correspondent Baek Jong-min] The inflation expectations of Americans have soared to an all-time high.

On the 12th (local time), according to CNBC, the New York Federal Reserve Bank announced that the consumer expectations index survey for June showed that the inflation rate expected by U.S. consumers over the next 12 months was 4.8%. This is an increase of 0.8 percentage points from 4.0% in the previous month. CNBC explained that this is the highest record since the related survey began in 2013.

With recent indicators showing some retreat in employment and industrial conditions, if inflation persists, demands for the Federal Reserve's early normalization of interest rates may increase. The Fed projected last month that this year's inflation rate would be 3%, and 2.1% from next year onward.

John Williams, president of the New York Fed, who announced the survey results that day, said that employment and prices have not yet made significant progress. He explained that interest rate hikes can only proceed after achieving both employment and inflation targets.

The Fed is also expected to maintain the argument that current inflationary pressures are temporary in the report to be submitted ahead of Chairman Jerome Powell's congressional testimony this week. Powell's testimony is linked to the June Consumer Price Index (CPI) to be released on the 13th. Chairman Powell has consistently maintained the stance that concerns about rising prices are temporary.

Last May, the CPI rose 5% compared to the same period last year, higher than expected, and the core CPI excluding fuel and food increased by 3.8% compared to the same period last year, raising inflation concerns. Market expectations estimate that the CPI will rise 5%, the same as the previous month, and the core CPI will increase by 4%.

Meanwhile, the 10-year U.S. Treasury auction on the day set the interest rate at 1.371%. The U.S. Treasury auction rate sharply declined from 1.497% on the 12th of the previous month, reflecting easing inflation concerns and the possibility of a slowdown in economic recovery.

This content was produced with the assistance of AI translation services.