Pumping More Oil & Less Gasoline

Fed officials often have said that they want to make sure that inflation is “well anchored.” In other words, they want to see that inflationary expectations are low. So it was a bit unsettling that Friday’s release of the consumer sentiment survey for the first half of November showed the one-year expected inflation rate jumped from 3.2% in September to 4.2% in October and 4.4% in early November. The survey’s five-years-ahead inflationary expectations rose from 2.8% to 3.2% over this same interval.

On the other hand, on Monday, we learned that the comparable readings for October’s consumer survey conducted by the Federal Reserve Bank of New York were 3.6% over the coming year and 2.7% over the next five years (chart). So they show that inflationary expectations remain reasonably well anchored.