Inflation fears intensified in September, pushing the near-term outlook in the New York Federal Reserve's monthly survey to its highest level in nearly 3½ years.
The central bank's Survey of Consumer Expectations indicated that the median view for inflation over the next 12 months rose to 3.9%, up 0.3 percentage point from August and the highest level since May 2023, when the figure was at 4.1%.
Similarly, the survey found that household spending growth is expected to hit 5.5%, also up 0.3 percentage point month over month and the highest since May 2023.
The results come with Fed officials grappling over the proper setting of monetary policy as inflation holds well above the central bank's 2% target.
Markets largely expect the Federal Open Market Committee to keep benchmark rates steady when it meets later in October. Inflation in August came in lower than expected, according to the Fed's preferred gauge. In recent days several key officials, including New York Fed President John Williams, have said policymakers can afford to take their time when evaluating where interest rates should be set.