Feb 9 (Reuters) – Americans worried less about near-term developments in inflation and hiring in January, a report from the Federal Reserve Bank of New York said on Monday.
As part of its latest Consumer Expectations Survey, the bank said inflation expectations a year from now stood at 3.1% in January compared to 3.4% in December, while over the three- and five-year horizons, expectations remained stable at 3%.
On the hiring front, some of the bad mood about the labor market outlook eased in January. The survey found that respondents see a lower likelihood of losing their job and a better prospect of finding one if they did.
In January, households also reported that they had higher income expectations in January compared to December, while the level of income expected a year from now decreased last month compared to December.
Although households were more optimistic about hiring overall, they still collectively said they expect the unemployment rate to be higher a year from now compared to what they saw in December.
At the same time, respondents believe that it will be more difficult to obtain credit in the future, while downgrading the status of their current and future financial situation in January compared to the previous month.
The decline in expected short-term inflation is likely to be seen as good news by Federal Reserve authorities, who continue to navigate a difficult environment of price pressures.
The Federal Reserve cut its target interest rate range by 75 basis points last year to between 3.5% and 3.75%, as it sought to support a weakened labor market while imposing enough moderation on the economy to help reduce inflationary pressures. It held rates steady in January, although some officials favored a cut.
Federal Reserve officials have been describing the labor market as a low-hiring, under-fire environment, and some policymakers say lowering the cost of short-term credit is necessary to help ensure the hiring sector doesn’t run into more serious problems.
Federal Reserve officials expect inflation to decline throughout the year due to projections that tariff pressures will ease. Part of their confidence that inflation will return to its target is based on the relative stability of long-term inflation expectations.
The data suggests that “the American people believe we are committed to reducing inflation to our goal,” Federal Reserve Vice Chairman Philip Jefferson said Friday. “My view is that we are still seen as credible relative to the current situation with above-target inflation,” and that inflationary pressures will ease over time, he said.
(Reporting by Michael S. Derby; Editing by Andrea Ricci)