Inflation Expectations and the Fed

Fight disinformation. Get a daily recap of the facts that matter. Sign up for the free Mother Jones newsletter.


The Cleveland Fed has released its latest estimates of expected inflation, and Matt Yglesias thinks it’s good news for the Fed:

I’d say it looks like mission accomplished for the FOMC. Relative to last month, short-term expectations are meaningfully higher indicating a coordination of expectations along a higher demand equilibrium. But long-term expectations remain “anchored” exactly where they were.

As you can see in the modified version of the chart on the right, 1-year inflation expectations have gone up from 1.6 percent to 2.1 percent, while 10-year inflation expectations have remained anchored at 1.5 percent.

But I’m not sure what this tells us. The data is for the first day of the month, so the jump in the chart is from November 1 to December 1. That’s obviously not the result of Wednesday’s Fed announcement. Likewise, September’s Fed announcement should show up as a change in expectations between September 1 and October 1, but inflation expectations declined between those two dates. I’d like to hear more about this from the folks who follow this closely, but to me it looks more like random month-to-month noise than anything else.

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2021 demands.

payment methods

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2021 demands.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate