According to Commerzbank, U.S. consumer inflation expectations have sharply increased, based on data from the University of Michigan. The surveys, released in April 2025, showed a significant rise in both short-term and long-term inflation expectations.
The University of Michigan's survey indicated that year-ahead inflation expectations rose to 6.5% in April 2025, the highest since November 1981. The five-year inflation outlook also increased to 4.4%, the highest since June 1991.
Commerzbank suggests that rising inflation expectations could compel the Federal Reserve to take more aggressive action. They caution that delaying intervention might lead to more severe economic consequences. While Fed Governor Christopher Waller has mentioned potential rate cuts if tariffs lead to increased unemployment, Commerzbank points out that rising inflation expectations complicate this approach, potentially forcing the Fed to prioritize inflation control.