This is eye opening and a genuine cause for concern should households embed these expectations in wage demands. However, market-based measures of inflation expectations and the five-year inflation expectations from the New York Fed survey continue to be anchored near our 2 percent target.
I also look at the Board of Governors staff’s common inflation expectations measure, which distills a signal from both surveys and market-based inflation gauges. At this point, at least, it remains near its average over the past decade. This gives me some comfort that the recent run of high inflation readings has not led to an unanchoring of inflation expectations.