June 2025 FOMC Preview: Staying On The Sidelines

The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the May 2025 Survey of Consumer Expectations, which shows that households’ inflation expectations declined at the short-, medium-, and longer-term horizons. Consumers’ recent pessimism about the labor market eased somewhat, while consumer debt delinquency expectations and expectations about one’s household financial situation improved slightly. The main findings from the May 2025 Survey are: Inflation • Median inflation expectations decreased at all three horizons in May. One-year-ahead inflation expectations declined by 0.4 percentage point to 3.2%, three-year-ahead inflation expectations declined by 0.2 percentage point to 3.0%, and five-year-ahead inflation expectations declined by 0.1 percentage point to 2.6%. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) decreased at all three horizons. The declines in median one- and three-year-ahead inflation expectations were broad-based across age, education, and income groups. NY Fed consumer survey inflation expectations tumble: 1 Yr: 3.2% from 3.6% 3 Yr: 3.0% from 3.2% 5 Yr: 2.6% from 2.7% NY FED: MAY VIEW ON PERSONAL FINANCIAL SITUATION IMPROVED SLIGHTLY || NY FED: CONSUMERS’ OUTLOOK ON JOB MARKET IMPROVED IN MAY || NY FED: IN MAY HOUSEHOLDS LOWERED EXPECTATIONS OF MISSING DEBT PAYMENT