American portfolios once again under pressure
Inflation expectations of Americans rose in June, mainly due to expected increases in medical care costs and rent, according to a study published by the Federal Reserve Bank of New York.
Consumers expect price increases of 3,7% over the next 12 months, while in May they forecast 3.5%.
Three‑year inflation forecasts rose to 3,3% from 3.1% a month earlier, reaching the highest level since June 2022.
Five‑year expectations remained unchanged at 3%.
Although consumers remain more optimistic about their financial situation and labor market prospects, they still see risks associated with ongoing inflationary pressure.
Market participants predict that the Federal Reserve will decide to raise interest rates this year to counter high inflation.
Recall that since the beginning of the year the Fed has kept the federal funds rate unchanged in the range 3,5-3,75%.
However, the latest forecasts show that nine Fed members still expect at least one rate hike by year‑end.
After months of pressure related to rising energy costs due to the Middle East conflict, consumers assessed that gasoline prices are now rising at the slowest pace since mid‑2022.
Overall energy prices fell in recent weeks after a temporary peace agreement between the United States and Iran.
Nevertheless, the lack of a lasting end to the conflict still raises concerns that the difficult geopolitical situation could again translate into inflationary pressure.
Federal Reserve Chair Kevin Warsh recently assured that Donald Trump has given him freedom in decision‑making, even though the U.S. president had previously pressured the central bank to lower rates.
Warsh plans to stop publishing forecasts on the Fed’s future monetary policy path, a move supported by U.S. Treasury Secretary Scott Bessent, among others.
Not all Fed members share this view. Christopher Waller, a Fed Governor, opposed this approach, highlighting the importance of transparent communication from the central bank to the market.
We wrote more about this in the article: Dollar rate turns toward the Fed. Warsh will shake USD/PLN and EUR/USD?
The Fed’s upcoming change in communication style will remain a key factor influencing investor expectations and consumer concerns.
Reduced transparency can lead to increased uncertainty and weaken confidence in the Fed’s independence, especially amid worries about the possibility of political pressure on the central bank’s leadership.
Source: Bloomberg.
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Dollar to zloty rate on Wednesday, July 8
The dollar to zloty rate on Wednesday, July 8 is at 3,76 PLN.
Chart. Dollar to zloty rate (USD/PLN)
Source: Trading Economics.
The euro to dollar rate reaches 1,14 USD.
Chart. Euro to dollar rate (EUR/USD)
Source: Trading Economics.
Read also: Dollar rate before a chance to break out? Expert: “Capital will flow back to USD”
See also: Dollar rate before a “nervous and dynamic” move, euro waiting for a drop? Expert issued a forecast for USD/PLN and EUR/USD
Source: Bloomberg.
