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2d ago

Consumer Inflation Expectations Ease as Trump Scales Back Tariff Threats

Officials expect to hold rates steady after May’s consumer survey showed cooling price worries alongside stronger household finances.

People shop at a grocery store in Brooklyn on May 13, 2025 in New York City.
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The U.S. flag flies outside The Federal Reserve Bank of New York in New York City, U.S., October 12, 2021. REUTERS/Brendan McDermid/ File Photo

Overview

  • The New York Fed’s Survey of Consumer Expectations found the one-year inflation outlook fell to 3.2% in May from 3.6% in April.
  • President Donald Trump’s decision to back off several proposed tariffs coincided with the steepest monthly drop in near-term price fears since late 2022.
  • Consumers also trimmed their three-year and five-year inflation forecasts to 3% and 2.6%, respectively.
  • Expectations for food prices jumped to 5.5%—the highest since October 2023—while job-loss probabilities and debt-default fears both declined.
  • With inflation gauges softening, the Federal Reserve is poised to maintain its benchmark rate as markets await a May CPI report expected to show a modest uptick.