US consumers had mixed views on the inflation trajectory in August, seeing prices hold steady in the short- and long-term but expecting a drop over the next three years, a survey by the Federal Reserve Bank of New York showed Tuesday.
Median one- and five-year inflation expectations remained unchanged at 3.6% and 3%, respectively, last month, while the three-year outlook edged down 0.1 percentage point to 3.2%.
Year-ahead gas price growth expectations climbed in August, according to the survey.
Oil prices are up so far in September following two consecutive monthly gains as tensions between the US and Iran escalated.
The New York Fed report comes as markets await the August consumer and producer price data for August, due out later this week. Those reports could serve as crucial data points for the Federal Open Market Committee, which begins its two-day policy meeting Tuesday next week.
The Federal Reserve's preferred inflation metric -- the personal consumption expenditure price index -- held steady at 3.7% year over year in July, well above its 2% target, data released last month showed. The annual core rate, which excludes food and energy, was unchanged at 3.3% in July.
Markets are pricing in a 60% probability that the FOMC will raise the benchmark lending rate by 25 basis points on Sept. 16, with the remaining odds pointing to another Fed pause, according to the CME FedWatch tool.
Fed Chair Kevin Warsh said late last month that the central bank's primary focus should be on prices, given that the US was doing well on the employment front. Several other Fed officials have also expressed increased concern over elevated inflation.
The mean probability that the unemployment rate will rise in the next 12 months rose by 1.6 percentage points to 44.4% in August, marking the highest reading since April 2020, the New York Fed survey showed.
"Labor market expectations were mixed with unemployment and job finding expectations deteriorating while job loss and quit expectations improved somewhat," the Fed branch said.
Warsh described the labor market as "quite stable" during his Jackson Hole speech, citing a 4.1% unemployment rate that he said remained low by historical standards.
