The mean in the Atlanta Fed’s Business Inflation Expectations Survey slipped to 1.8% in October from 1.9% in each of the prior three months. The reading matched the outlier of 1.8% in May and both were the lowest since 1.8% in February 2018.
The University of Michigan’s Survey of Consumers saw its preliminary inflation expectations decline in October to 2.5% from 2.8% for the 1-year measure and reach a record low of 2.2% for the 5-year measure. Even with other inflation indicators showing core price increases more-or-less near the Fed’s 2% objective, these sorts of readings will cause at least some FOMC participants concern about the credibility of the inflation objective and in turn lend support to increasing accommodation to ensure that markets understand the Fed will act to prevent the anchor being lost.
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