Dollar Drops As Consumer Inflation Expectations Crash To Record Lows

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Having warned in Novemeber 2015 of a “deflationary mindset”, University of Michigan survey director Richard Curtin notes that things have done nothing but get worse.

While reflation trades run amok in capital markets, real people’s expectations of inflation in the medium-term has collapsed to its lowest on record…

 

In the latest massive setback for the Federal Reserve, which is desperate to break the recent “deflationary mindset” to have gripped the US population (see Japan for the results), long term inflation expectations declined to the lowest level since 1980: an annual rate of 2.2% was expected in the next five years, down from 2.5% last month and 2.3% in December. Just 6% expected long term deflation. These lows were supported by the fewest complaints of rising prices eroding their living standards—just 6%, the lowest since 2002 and barely above the all-time low of 4%.

And this is weighing on the dollar…

 

The Dollar Index is very close it slowest since the election – seemingly erasing the hope of reflation and exuberance.

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