What the 5-year, 5-year forward inflation expectation rate measures
The 5-year, 5-year forward rate (5y5y) uses the 5-year and 10-year breakeven rates to work out the average inflation investors expect over the five years that begin five years from today. Leaving out the next five years removes most of the effect of current inflation and oil prices, so it is a gauge of long-run inflation expectations. Monthly averages of daily data from 2003.
How to read this chart
A flat line in the low 2s means markets believe the Fed will keep inflation near its target in the long run, whatever happens this year. A sustained move higher would suggest expectations are coming unanchored; a slide toward 1.5% points to worries about persistently weak demand.
The latest reading in context
- At 2.30%, the latest reading is above its 5-year average of 2.27% and above its 10-year average of 2.12%.
- Of all 286 monthly readings since January 2003, 51% were lower than today’s and 48% were higher.
- Direction: down 0.04 points over the past month; up 0.13 points over the past six months; up 0.05 points over the past year.
- The highest value on record is 2.88% (February 2013, 13 years ago); the lowest is 0.73% (December 2008, 18 years ago).
- The full history spans 2 US recessions, shaded grey on the chart.
Why it matters
Central bankers treat anchored long-run expectations as the core of their credibility: if businesses and workers believe inflation will return to 2%, temporary shocks fade instead of feeding a wage–price spiral. Fed officials regularly cite the 5y5y rate in speeches and policy discussions.
What moves the 5-year, 5-year forward inflation expectation rate
- Credibility of the Fed’s 2% target
- Long-term views on growth and fiscal policy
- The inflation risk premium investors demand
- Relative liquidity of TIPS and nominal Treasuries
Key moments in its history
- Late 2008Fell during the financial crisis, though far less than shorter-horizon breakevens.
- 2015–2016Slipped toward 1.5% as oil prices collapsed and inflation stayed low.
- 2020Dipped in the pandemic, then recovered as stimulus began.
- 2022Stayed close to 2–2.5% even as CPI inflation peaked above 9%, a sign that expectations remained anchored.
5-Year, 5-Year Forward Inflation Expectation data tables
Average by decade
| Decade | Average | High | Low |
|---|---|---|---|
| 2020s (so far) | 2.17% | 2.46% | 1.30% |
| 2010s | 2.25% | 2.88% | 1.50% |
| 2000s | 2.34% | 2.74% | 0.73% |
Last 12 months
| Period | Value | Change |
|---|---|---|
| Oct 2026 | 2.30% | −0.04 pts |
| Sep 2026 | 2.34% | +0.03 pts |
| Aug 2026 | 2.31% | +0.08 pts |
| Jul 2026 | 2.23% | +0.01 pts |
| Jun 2026 | 2.22% | −0.05 pts |
| May 2026 | 2.27% | +0.10 pts |
| Apr 2026 | 2.17% | +0.05 pts |
| Mar 2026 | 2.12% | −0.03 pts |
| Feb 2026 | 2.15% | −0.07 pts |
| Jan 2026 | 2.22% | +0.01 pts |
| Dec 2025 | 2.21% | +0.03 pts |
| Nov 2025 | 2.18% | −0.07 pts |
Monthly values. Decade figures are averages of the monthly values in each decade. The complete history is available as a CSV file.
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5-Year, 5-Year Forward Inflation Expectation: questions and answers
How is the 5y5y forward rate calculated?
From the 10-year and 5-year breakeven rates: roughly twice the 10-year breakeven minus the 5-year breakeven, adjusted for compounding. The series is computed by the Federal Reserve Bank of St. Louis from Treasury and TIPS yields.
Why does the Fed care about expectations so far ahead?
If people expect inflation to stay high years from now, they build it into wage deals, prices and contracts, which makes high inflation self-sustaining. Stable long-run expectations give the Fed room to look through temporary shocks.
Where does the data on this chart come from?
From the Board of Governors of the Federal Reserve System. ChartWidgets downloads the series (T5YIFR) from FRED, the Federal Reserve Bank of St. Louis database, and checks for new releases every day. The last update was on November 4, 2026.