US Inflation Forecasts: Latest Updates and Data Interpretation by NY Fed

Investing.com – The New York Fed released important forecasts about the future of US inflation. Inflation is the most important indicator that the Fed uses to determine whether monetary tightening is still in favor of the economy or not.

Highlights:

• Forecasts for May next year are at the lowest levels since May 2021
• Credit activity eased in May
• Three-year inflation expectations rose from 2.9% in April to 3% in May
• The 5-year inflation forecast rose from 2.6% to 2.7% in May
• Consumers expect rent, food, and health care costs to fall

Data interpretation

This data, beginning with declining credit activity, indicates that the Fed may hold off on raising interest rates for the time being, because restrictions on credit activity play the same role as raising interest rates. Also, the decline in expectations and the increase in consumer optimism that prices will continue to decline may be somewhat reassuring to the Fed at the present time.

Despite this, the credit rating agency Moody’s believes, and the agency indicates that interest is close to reaching its peak, but the monetary tightening continues.

Market monitoring

It remains high today by 0.09% at 103.237, while it declines by 0.41% to $1,969 an ounce, and it records $1,955 in spot transactions.

Today, oil incurs heavy losses exceeding 3% for the US contracts, which fell to levels of $67.85 a barrel, while recording a decline of 2.77% to $72.27 a barrel.