Will Next Week’s US Consumer Inflation Report Highlight Tariff Risk?

BoE Gov. Bailey: More uncertainty now about when steps are taken. BoE Gov. Bailey: Market repricing no surprise given fine balance. BoE Gov. Bailey: Rates path is still downwards over time. BoE Gov. Bailey: The steepening of the yield curve is a global phenomenon.

The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the July 2025 Survey of Consumer Expectations, which shows that households’ inflation expectations increased at the short and longer-term horizons and were unchanged at the medium-term horizon. Consumers expect smaller growth in their tax payments and are more optimistic about their household financial situations. Expectations about the labor market were mixed with consumers reporting greater likelihoods of losing and finding jobs, and a lower likelihood of a rise in overall unemployment. The survey was fielded from July 1 through July 31, 2025. Median inflation expectations in July increased at the one-year-ahead horizon to 3.1% from 3.0% and at the five-year-ahead horizon to 2.9% from 2.6%. They remained steady at the three-year-ahead horizon at 3.0%. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) decreased at the one-year horizon, was unchanged at the three-year horizon, and increased at the five-year horizon. NY Fed inflation expectations: 1 year: 3.1%, vs 3.0% last 3 years: 3.0%, vs 3.0% last 5 years: 2.9%, vs 2.6% last

table