Americans' inflation outlook was little changed in May despite upward pressure on prices resulting from the war in the Middle East, a survey released by the New York Federal Reserve showed on Monday.

Inflation a year from now was expected to be 3.5% versus 3.6% in April, while respondents saw inflation three years and five years from now ‌at 3.1% and 3%, respectively.

While the projected path of price pressures was little changed in May, the regional Fed ​bank's survey found that uncertainty over future inflation rose over near-term measures, amid rising anxiety about the current and future state of personal finances.

The relative calm in inflation expectations will likely cheer U.S. central bank officials as ⁠they prepare for their June 16-17 policy meeting.

The Fed is expected to leave its benchmark interest rate in the 3.50%-3.75% ​range at that meeting as officials wait for more data on the economic impact of the war.

The conflict has brought ⁠trade flows through the Strait of Hormuz to a near halt and caused a surge in gasoline prices, which in turn have driven headline measures of inflation higher.

It's also causing notable supply chain disruptions, which could also add to inflation.

The inflation outlook has also unsettled the monetary policy path. A number of Fed policymakers ‌have begun to speculate that interest rates may need to rise to ensure that the central bank's key inflation gauge — ​the Personal Consumption Expenditures Price ‌Index — moves back to its 2% target.

It reached 3.8% on a year-over-year basis in April.

The case for rate hikes was bolstered on Friday with the release of an unexpectedly strong employment ‌report for May.

The job market's vigor suggests a less challenging trade-off for Fed officials as they try to balance support for the labor market and the need to curtail inflation pressures.

Fed officials have pointed to the relative stability of longer-run inflation expectations ⁠as a sign of public confidence that inflation will return ‌to target, although data from the University of ⁠Michigan has suggested a less benign future for price pressures.

"If we see inflation expectations starting to migrate away from that 2% objective, that's a signal that this inflationary mindset ⁠might be ⁠setting in," Cleveland Fed President Beth Hammack said in a speech on June 2. "I'm not seeing signs of that right now, but it's something that I'm watching closely."

The New York ‌Fed survey showed that the year-ahead expected rise in gasoline prices stood at 5% in May, down slightly from April.

The year-ahead expected rate of home price growth jumped to 3.5% from 3% in April, marking the biggest reading since July 2022.