Americans' expectations for future inflation plunged in July, at least according to one closely watched survey out this morning. That's great news for anyone who doesn't want current prices to become the new normal.

Driving the news: The Federal Reserve Bank of New York's Survey of Consumer Expectations showed steep drops in how high respondents expected inflation to be across a variety of time horizons.

Why it matters: The higher people expect inflation to be, the more likely it is to materialize as businesses feel more comfortable raising prices and workers demand steeper wages.

• In that sense, falling inflation expectations are a welcome sign that the high inflation of the last year is not causing a long-lasting shift in Americans' psychology around money.

Yes, but: Inflation expectations in this survey remain far above the levels that prevailed in the years before the pandemic, and above the 2% inflation rate the Fed is targeting.

By the numbers: Survey respondents expected inflation of 6.2% over the next year, down from 6.8% in June. That was the steepest one-month drop in that number in the survey's nine-year history.

• Expectations over the next three years fell to 3.2% from 3.6%, and five-year expectations to 2.3% from 2.8%
• The drop was most pronounced among survey respondents making less than $50,000, perhaps reflecting that those most pinched by soaring gas prices saw some relief last month.

Between the lines: Fed chair Jerome Powell mentioned the New York Fed's results as a reason to pivot toward more aggressive rate increases at the June policy meeting. So the numbers receding some will likely give comfort to the central bank.

Meanwhile, the survey also showed that Americans' expectations for their own wages remain stable. Survey respondents expected their earnings to rise 3% over the next year, as they have for seven straight months.

• Americans remained generally optimistic about the labor market, despite the bumpy economic environment: The average perceived probability of losing one's job over the next year edged down to 11.8%.

The bottom line: The signs are pointing toward Americans viewing high inflation as a temporary aberration, not simply the way things will always be.

If you didn't spend your Saturday at the Kansas Bankers Association and/or hitting refresh on the Fed's website, you might have missed the latest signal that the central bank will not be relenting on its rate-rising campaign anytime soon.

• Governor Michelle Bowman said she envisions keeping 0.75 percentage point increases "on the table" until inflation is quashed.

State of play: Following the Fed's late-July policy meeting, investors started to buy into the idea that the central bank wouldn't raise rates too much more, and may even end up easing next year.

• In recent days, a range of officials have pushed back on that idea, though until Bowman's speech all of them were presidents of regional Fed banks and not on the Board of Governors.

What they're saying: In backing the Fed's latest hike, Bowman argued: "My view is that similarly-sized increases should be on the table until we see inflation declining in a consistent, meaningful, and lasting way."

• She also said the Fed's practice of giving "forward guidance" of its future actions is flawed, and one reason the central bank was behind the curve on addressing inflation.
• "I am pleased to see that following the July meeting, the FOMC ended the practice of providing specific forward guidance in our post-meeting communications," she added. That "overly specific" guidance offered in December 2020 was a factor that "led to a delay in taking action to address rising inflation," Bowman said.