How Do People Revise Their Inflation Expectations?

Olivier Armantier, Giorgio Topa, Wilbert van der Klaauw and Basit Zafar

No 20160822, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The New York Fed started releasing results from its Survey of Consumer Expectations (SCE) three years ago, in June 2013. The SCE is a monthly, nationally representative, internet-based survey of a rotating panel of about 1,300 household heads. Its goal, as described in a series of Liberty Street Economics posts, is to collect timely and high-quality information on consumer expectations about a broad range of topics, covering both macroeconomic variables and the households' own situation. In this post, we look at what drives changes in consumer inflation expectations. Do people respond to changes in recent realized inflation, and to expected and realized changes in prices of salient individual commodities?like gasoline? Understanding what drives inflation expectations is important for the conduct of monetary policy, since it improves a central bank?s ability to assess its own credibility and to evaluate the impact of its policy decisions and communication strategy.

Keywords: expectations (search for similar items in EconPapers)
JEL-codes: D1 (search for similar items in EconPapers)
Date: 2016-08-22
New Economics Papers: this item is included in nep-mac and nep-mon
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