The chances of the US economy falling into deflation, a general decline in prices for goods and services, have declined to zero, according to Federal Reserve’s deflation probability indicator.
Deflation looked like a done deal a month ago when the indicator was hovering at 76.3%, the highest level since 2008.
And while the deflation probability indicator has normalized, the market-based measures of inflation expectations, as represented by the 10-year breakeven inflation rate, have increased to 1.67%, the highest level since January 24, according to data source St. Louis Federal Reserve.
Inflation expectations had dropped to a low of 0.52 in March as stocks collapsed on coronavirus-led global recession fears.
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