Breitbart Business Digest: Business Inflation Expectations Fall Below Average

Published: Thursday, December 18, 2025 at 12:29 am

Business Inflation Expectations Show Stability, Challenging Fed Concerns

Recent data from the Federal Reserve Bank of Atlanta's Business Inflation Expectations (BIE) survey suggests that inflationary expectations among businesses are well-anchored, contradicting concerns raised by Federal Reserve Bank of Atlanta President Raphael Bostic. Bostic dissented from the Federal Open Market Committee's December rate cut, citing fears that persistent inflation above the 2% target could erode the Fed's credibility.

However, the BIE survey paints a different picture. The survey indicates that businesses anticipate inflation of 2.2% over the next year, slightly above the pre-pandemic average. More importantly, these expectations have significantly decreased from their peak in April 2022. This decline suggests a successful re-anchoring of expectations following the inflation shock.

The survey, which asks businesses about their unit costs, has proven to be a reliable indicator of actual inflation. While Bostic expressed concern about firms' plans to raise prices, the data on unit cost projections offers a more established record. The Atlanta Fed's data on projected price increases, though a shorter time series, shows a downward trend, with the lowest expected price increase since 2021.

Long-term inflation expectations, which Bostic views as a key indicator of credibility, are also falling. These expectations are currently below pre-pandemic levels. This trend contradicts the notion of a credibility crisis, as it suggests that businesses do not anticipate sustained high inflation in the long run.

The article suggests that the real threat to the Fed's credibility may stem from its public pronouncements regarding tariffs and their impact on inflation, which have not materialized. If the Fed is perceived as maintaining high interest rates to combat a non-existent threat, public and political patience may wane, potentially undermining the Fed's independence.

BNN's Perspective: The data presented in the BIE survey offers a nuanced perspective on inflation expectations. While the Fed must remain vigilant, the current data suggests that the situation is under control. The focus should be on data-driven decisions rather than preemptive measures based on potentially unfounded fears.

Keywords: inflation expectations, Federal Reserve, BIE survey, Raphael Bostic, inflation, monetary policy, business inflation, economic data, interest rates, credibility, tariffs, price increases, unit costs, long-term expectations, pre-pandemic, recession, Federal Open Market Committee, economic outlook

Full Story