But for now, the University of Michigan’s survey on inflation expectations remains an outlier, with financial market measures of inflation expectation still largely pricing in a long-term path closer to the Fed’s two per cent target.
In a speech in Hot Springs, Arkansas, on Friday, St Louis Fed President Alberto Musalem said “continued vigilance” and “careful monitoring” of the incoming data was needed.
Musalem, a voting member of the Fed’s rate-setting committee this year, said that while he still expects a “moderate” pace of economic expansion, the near-term risks were “skewed” toward rising inflation, slower economic growth and a cooler labour market.
“I would be wary of assuming the impact of high tariffs on inflation would be only brief or limited,” he said.
