The debate around the Federal Reserve boardroom table next week just got more interesting.

U.S. households' long-term inflation expectations, a measure tracked closely by policymakers, fell to a record low this month in data going back to 1979, according to preliminary results of the University of Michigan's June survey of consumers released Friday.

That will probably strengthen the argument for the Fed to delay any interest-rate increases, particularly since Chairwoman Janet Yellen said on Monday that lower readings on inflation expectations were on her radar screen. The numbers will feed into a discussion that will also include Chicago Fed President Charles Evans's suggestion to hold off on a hike until actual inflation, excluding food and energy prices, accelerates to 2 percent.

The Michigan survey showed that the median response to the question about what average annual inflation would be between five and 10 years from now was 2.3 percent, down from 2.5 percent in May.

Expected inflation is a major determinant of where inflation ultimately ends up, in the view of many at the Fed — more so than where inflation has been recently, or the amount of slack in the labor market, according to a forecasting model Yellen presented in an appendix to a speech she gave in September.

Furthermore, in a speech on Monday, Yellen said "the indicators have moved enough to get my close attention," adding that "if inflation expectations really are moving lower, that could call into question whether inflation will move back to 2 percent as quickly as I expect."

Yellen

"The key thing to watch next week will be whether the Fed changes its language on inflation expectations" in the statement it publishes after its meeting, Neil Dutta, head of U.S. economics at Renaissance Macro Research in New York, said in an e-mail.

The drop will also bolster a case that Evans said he would be presenting when he and his colleagues on the rate-setting Federal Open Market Committee gather June 14-15 in Washington.

Evans suggested in a June 3 speech that, while it may be appropriate to continue raising interest rates gradually this year after lifting them in December for the first time in nearly a decade, "it may be best to hold off raising interest rates until core inflation is actually at 2 percent" given soft inflation expectations and downside risks to his forecasts for a gradual increase in price pressures over the next several years.

The Fed's preferred inflation gauge is based on the Commerce Department's price gauge for personal consumption expenditures. Excluding food and energy, that rose 1.6 percent in the year through April. The median projection of 17 FOMC members in March, when they last submitted forecasts, was that the pace would be 1.6 percent at the end of the year, and pick up to 1.8 percent at the end of next year.

The FOMC has been debating how soon to raise interest rates again, and how quickly. The Evans proposal marks the first departure from that conversation since policymakers began tightening policy in December.