(Reuters) – A week with a lot of worrying inflation figures may have also marked a change in the market view of Federal Reserve. As inflation expectations dropped, bond yields moderated and consumers stopped ratcheting upward their price rise outlook, it was possible that consumers saw a shift in Federal Reserve’s views.

Surveys of forecasters from the profession supported the Fed’s hopes of taming inflation while not destroying millions of jobs.

According to the Philadelphia Federal Reserve quarterly survey, estimates of annual inflation for the next year dropped below 3% depending on which price measures were used. However, the consensus view of the unemployment rate over the next 2 years jumped to 3.8% from 3.6%. Fed officials would love this outcome if it happens.

Jerome Powell, the Chair of the Fed, has been warning Americans about the potential for painful increases in interest rates to stem the rise in inflation. Powell said that Powell believes increases in the benchmark rate of half a percent were warranted by the Fed last week.

Powell spoke on Thursday to Marketplace, public radio.

According to the headline inflation readings for business and consumer production, the week saw a decrease in the weekly consumer prices. This suggests that the 8.5% consumer price increase in March might have crested.

Although they did not slow as anticipated, investors took advantage of the positive surprises to increase bond prices while reducing yields by pulling them from highs for many years.

The yield on the 10-year Treasury notes fell about 20 basis point during week one. It was the worst weekly fall since March. Meanwhile, the Treasury Inflation Protected Securities reflected 10-year inflation expectations, hit their lowest levels since February.

Inflation expectations benchmark measurements from ICE, NYSE: showed that the year-end outlook for inflation has dropped to 4.5% from 6% by mid-April.

Graphic – ICE inflation expectations index ICE inflation expectations index: https://graphics.reuters.com/USA-FED/INFLATION/akvezxjwrpr/chart.png

According to Piper Sandler’s Head, Global Policy Roberto Perli (Piper Sandler), about half of the fall in Treasury yields was caused by falling inflation expectations. He wrote that this aspect is distinct from any other factors contributing to the change in bond yields.

Perli stated that “is great news for Fed”. It is possible that the Fed might be less aggressive in their hiking campaigns if it goes on (which, by the way, it’s a very big possibility). Market inflation expectations remain too high to allow the Fed victory.

The price rise is not being accelerated, according to consumers.

The University of Michigan released Friday’s data on consumer attitudes. It found that there was no change in household’s inflation outlooks one year ahead for the third consecutive month. This is despite the fact that the rate of 5.4% remained constant. For the fourth consecutive month, the view was unchanged at 3.3% over five years.

Randall Kroszner (ex-Fed governor) said that the Fed is still playing the “soft landing” game.

“Inflation expectations were not unanchored, despite inflation increasing from four-fold the rate of goal in a decade. Kroszner now works at the University of Chicago Booth School of Business as a professor. It is quite remarkable.