Long-Term Inflation Expectations Stable in New York Fed Survey

By Matt Grossman

Consumers' long-term inflation expectations held steady in April despite new price pressures from the war in Iran, according to a monthly survey by The New York Fed.

Expectations for price increases over the next 12 months rose slightly. But there was no change in inflation expectations over the next three or five years versus the March survey, signaling that consumers think the price shock from the war will prove temporary.

Fed officials keep a close eye on long-term inflation expectations because the numbers serve as a gauge of the Fed's credibility. If people lose confidence the Fed will keep inflation under control in the long run, they may choose to accelerate purchases before inflation erodes their spending power. Faster spending can perpetuate the inflation that the Fed seeks to curtail.

Other indications of long-run inflation expectations have been more concerning. The University of Michigan's April consumer survey found that inflation expectations in April rose to the highest level since October 2025. Earlier this month, a market-based inflation-expectations metric, the 10-year breakeven inflation rate, hit its highest level since early 2023.

The New York Fed's April survey also showed that consumers are feeling jittery about the labor market. On average, consumers said they see a 44% probability that unemployment will rise over the next 12 months, the highest figure in a year.

Write to Matt Grossman at matt.grossman@wsj.com

(END) Dow Jones Newswires

May 07, 2026 11:00 ET (15:00 GMT)

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