(Bloomberg) -- US consumers’ near-term inflation expectations fell last month to the lowest level in two years as their outlook for personal finances and credit conditions worsened, according to a Federal Reserve Bank of New York survey.

Median one-year-ahead inflation expectations declined by 0.3 percentage point to 4.1%, the lowest reading since May 2021. Expectations for inflation three years ahead and five years ahead each increased slightly, by 0.1 percentage point, to 3.0% and 2.7%, respectively, according to the New York Fed’s monthly Survey of Consumer Expectations.

Consumers also expressed more nervousness about their finances. Expectations for what earnings growth will be one year from now fell for the first time in five months, sliding to 2.8% from 3.0%. The drop was larger among respondents who had only a high school education.

A larger share of households said their finances were worse now than a year ago. The outlook for the future also deteriorated, with fewer respondents saying they expect to be better off a year from now.

More consumers said it was harder to access credit now compared to a year ago. At the same time, more households said they expect to see tighter credit conditions in one year. 

But it wasn’t all bad news. The perceived probability of job loss in the next year fell to 10.9%, the lowest since April 2022 and close the lowest level on record in data stretching back to 2013. Households also said they expected it would be easier to find a new job if they lost their current position.

The findings come just ahead of a two-day Fed policy meeting, where officials are expected to pause their aggressive tightening campaign to allow more time to learn about how prior interest-rate increases are affecting the economy. Uncertainty over how much credit conditions will tighten has bolstered the case for a pause.

Read More: Fed Backs Away From Wages Focus, Bolstering Case for Rate Pause

An update on the consumer price index due Tuesday is expected to show that core inflation, excluding food and energy, moderated to 5.2% in the 12 months through May. Reports on the labor market have been mixed, with employers adding more jobs than expected last month and the unemployment rate rising to 3.7%. 

Policymakers will release fresh forecasts this week for where they see interest rates, inflation and the unemployment rate heading over the next few years when their meeting concludes on June 14.

©2023 Bloomberg L.P.