Future inflation signals have been easing in the past month, an indication that the recent surge in inflation could be temporary.
DXY is down -0.21%.
- Inflation expectations by businesses, consumers, workers, and investors, which rose sharply from October to May, eased in July.
- The break-even inflation rate dropped 0.19% since mid-May and shed 0.21 points over five years.
- Business inflation expectation fell from 3% in June to 2.8% in July, which is still high compared to an average of 1.9% from 2012 to 2019.
- Fed has in the past insisted that the current price pressures are temporary as they are driven by slack in labor and unused business capacity.
- Some analysts are still pessimistic and see sustained inflation on Fed’s stimulus and supply chain disruptions.
- The cooling inflation signals come even as next year’s median price expectation from the University of Michigan survey rose to a high of 4.8% this month, the highest since August 2008.