Source: FRED: T5YIFR (Federal Reserve Bank of St. Louis)
Data through: Oct 16, 2026 · updated Oct 17 · Updates: Daily (business days)
WThe three bars show the last 3 weeks for this indicator, oldest left to newest right. Bar height reflects each reading relative to the other two — the tallest is the highest of the three, the shortest the lowest.
Historical context: Currently in the 56th percentile of all historical readings.
What this means right now: Long-run inflation expectations are fully anchored: the 5y5y forward is between 2% and 2.5%, which on a CPI basis matches the Fed's 2% PCE target. Whatever current inflation is doing, the bond market is pricing a return to target. This is the series' usual state, about 6 days in 10 since 2003 (3,674 of 5,952).
5-Year, 5-Year Forward Inflation Expectation — the last 12 months
Every month's reading, with the band the heatmap gives it. The chart above shows the same series in full.
Month
Value
Band
Oct 2026
2.33%
Very strong reading
Sep 2026
2.36%
Very strong reading
Aug 2026
2.31%
Very strong reading
Jul 2026
2.30%
Very strong reading
Jun 2026
2.22%
Very strong reading
May 2026
2.24%
Very strong reading
Month-end readings of the same series the chart shows, from forward_5y5y. Values are the current record, not point-in-time: a month that has since been revised shows its revised value.
What is the 5y5y Forward Inflation?
The 5-Year, 5-Year Forward Inflation Expectation Rate (T5YIFR) measures what the Treasury market expects inflation to average over the five-year period beginning five years from now — years 5 through 10. It is derived from the gap between the 10-year and 5-year breakeven inflation rates: the 10-year breakeven covers the whole decade, the 5-year covers the first half, and the 5y5y forward isolates the back half.
That construction is the point. The first five years of breakevens are shaped by the current inflation cycle — oil prices, the latest CPI print, the current Fed stance. The 5y5y forward looks past all of that and asks: after this cycle plays out, where does the market think inflation settles? That makes it the cleanest market measure of Fed credibility, and the Fed itself cites it in that role.
The series is very stable — the definition of "anchored." Across 2003–2026 the middle half of all readings sits between 2.09% and 2.46%. That is on a CPI basis, which runs about 0.3 points above the Fed's PCE target, so about 2.3% here corresponds to 2% PCE. Even in 2022, with CPI inflation near 9%, the 5y5y forward never exceeded 2.67% — the market kept pricing a return to target. The dangerous readings have been on the downside: 0.43% in December 2008 and 0.86% in March 2020, when markets briefly priced deflation. So were the dips below 1.5% in 2016 (32 trading days, the low 1.41% in June), when the doubt was whether the Fed could get inflation up to 2%.
How We Color-Code the 5y5y Forward Inflation
Our heatmap colors this indicator against historically significant thresholds:
Below 1.00%
Expectations un-anchored on the downside — deflation priced in, as on 22 days since 2003: the winter of 2008–09 (the low, 0.43%) and one day in March 2020
1.00% – 1.40%
Anchoring under strain on the downside — 46 days since 2003, in the winter of 2008–09 and the spring of 2020
1.40% – 1.70%
Drifting below the anchor — 263 days since 2003, most of them in 2016 and 2020
1.70% – 2.00%
Near-anchored — slightly below the target range; 798 days since 2003, mostly 2015–20
2.00% – 2.50%
Fully anchored — the series' usual state, about 6 days in 10 since 2003 (3,674 of 5,952); about 2.3% here matches the Fed's 2% PCE target
2.50% – 2.80%
Near-anchored — slightly above the target range; 978 days since 2003, nearly all before 2015
2.80% – 3.20%
Drifting above the anchor — 171 days since 2003, most of them in 2011–13
3.20% – 3.60%
Anchoring under strain on the upside — no day since 2003 has been here
Above 3.60%
Expectations un-anchored on the upside — inflation-credibility loss (never yet reached)
Historical Extremes — What Happened Next?
When this indicator reaches extreme levels, history shows consistent patterns:
Dec 29, 2008Deflation-Spiral Pricing
0.43%
The all-time low. At the depth of the financial crisis the Treasury market priced long-run inflation near zero. It marked the extreme of the crisis: the reading was back above 2% by April 2009 as the Fed's first round of bond buying took hold. Illiquidity in TIPS exaggerated the move, but the direction was real.
Mar 19, 2020COVID Deflation Scare
0.86%
The pandemic crash priced years of sub-1% inflation for a single day. The reading was back to 1.7% by the end of July and above 2% by December — and within about two years the problem had inverted into the highest inflation in 40 years.
Nov 12, 2008Series High (Crisis Volatility)
3.05%
The all-time high — recorded, remarkably, during the financial crisis itself, as an illiquid TIPS market whipsawed breakevens both ways within weeks. The series has never held above 2.9% for long: its longest run there is 7 trading days.
Apr 21, 20222022 Inflation-Shock High
2.67%
The peak of the worst inflation episode in four decades — and it barely left the positive band. With CPI inflation above 8.5%, the market still priced years 5–10 inflation at just 2.67%, the clearest sign that the bond market expected the Fed to bring inflation back down.
Jun 17, 2016Lowflation Credibility Strain
1.41%
The non-crisis low. Years of below-target inflation, falling oil and global disinflation dragged the anchor itself down — the market began doubting the Fed could get inflation up to 2%.
Oct 15, 2021Reflation Repricing
2.41%
As realized inflation surged, the 5y5y forward rose only into the middle of its anchored band — the market read the shock as a cycle, not a lasting change. A textbook "anchored" reading in the middle of chaos, and close to where the series has sat since 2023 (median 2.27%).
Frequently Asked Questions
How is the 5y5y forward computed?
From TIPS breakevens: approximately 2 × (10-year breakeven) − (5-year breakeven). The 10-year breakeven is the average expected inflation over ten years; doubling it and removing the first five years' worth isolates years 5-10. FRED publishes this directly as T5YIFR, computed from its T10YIE and T5YIE series.
Why watch the 5y5y forward instead of the plain 5-year breakeven?
The 5-year breakeven is dominated by the current cycle — oil prices, the latest CPI prints, the current policy stance. In March 2022 it exceeded 3.5% while the 5y5y forward sat near 2.3%. The forward strips out the cycle and isolates the long-run question: where does inflation settle after all this? That is the question that matters for Fed credibility and long-duration asset pricing.
Why is ~2.3% the "anchored" level rather than 2.0%?
Two wedges. Breakevens are CPI-based and CPI inflation runs ~0.3pp above PCE inflation (the Fed's actual target basis) due to formula and weighting differences. Breakevens also embed a small, time-varying inflation-risk premium. Netting both, a 5y5y forward around 2.2-2.4% corresponds to market expectations of roughly 2% PCE inflation — squarely on target.
Did the 2022 inflation surge break this gauge?
No — and that was the story. With CPI inflation near 9%, the 5y5y forward peaked at just 2.67% (April 2022). The bond market treated the episode as a cycle, not a lasting change.
How are this page's colour levels set?
The colours are set around an anchor rather than in one direction, because long-run expectations that are too low and too high both mean they have come loose from the Fed's target. Readings of 2% to 2.5% are fully anchored: on a CPI basis, about 2.3% matches the Fed's 2% PCE target. Readings of 1.7% to 2% and 2.5% to 2.8% are near-anchored, slightly off target but within the credible range. Readings of 1.4% to 1.7% and 2.8% to 3.2% are drifting away from the anchor. Readings of 1% to 1.4% and 3.2% to 3.6% mark anchoring under strain. Below 1% the market is pricing deflation, and above 3.6% it would be pricing a loss of the Fed's inflation credibility; both are un-anchored. They are fixed levels, set in July 2026 with the series' whole history in view, and they do not move as new data arrives. A reading below 1% gets the same colour in 2008 as today, so a change of colour is a change in long-run expectations, never in the yardstick.