When it comes to inflation, expectations don’t always match reality. Inflation expectations just hit their highest point since May 2023, according to a survey of consumers from the New York Federal Reserve. The Fed keeps an eye on consumer expectations, and it tries to prevent runaway inflation expectations. In other words, when expectations come unmoored from reality, it can create an inflationary loop where the Consumer Price Index, or CPI, rises in line with expectations just because it’s what was expected. Schwab’s Kevin Gordon takes a look at the data ahead of this week’s CPI report in the Week Ahead.
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