Dealers Counter Fed on Falling Inflation Expectations
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The banks and brokerage firms that trade directly with the Federal Reserve disagree with central bank officials on why market-based measures of inflation expectations have been declining, according to the results of a survey of those firms published today.
The majority of the decline in so-called break-even inflation rates in September and the first half of October was driven by “the decline in crude oil prices, increased concerns regarding global growth and inflation, and expectations for the Federal Reserve to begin reducing monetary policy accommodation,” said the 22 primary dealers surveyed by the New York Fed ahead of the Federal Open Market Committee’s Oct. 28-29 meeting in Washington.