September 16, 2022 | 10:17
U of M Inflation Expectations Slide Further
Inflation? Oh that!
The latest University of Michigan consumer sentiment index ticked 1.3 pts higher to 59.5 in September, the highest since the spring. Granted the move was a bit below expected, but it is the third increase in a row. And, the view of the current situation and expectations continued to brighten a little, with both components edging higher again.
More interesting was the continued slide in inflation expectations (good news)... for 1-year and 5-years out.... to the lowest in about a year. Survey respondents are asked: 1) "During the next 12 months, do you think that prices in general will go up, or go down, or stay where they are now?"; 2) then they are asked the same question about the next 5-10 years. Then they're asked about the rate of change. In any event, perceptions of higher prices have calmed, particularly since June when the Federal Reserve first hiked 75 bps.
This more or less silences those calls for a 100 bp hike next week. For BMO Economics, we are sticking with 75 bps.