How Anchored Are Short-Run Inflation Expectations Today? A Look at What Consumers and Forecasters Are Telling Us

Alexander Cline and Robert Rich

Economic Commentary, 2026, vol. 2026, issue 01, 14

Abstract: Policymakers emphasize the importance of “well-anchored” inflation expectations to ensure that price- and wage-setting behavior does not become entrenched in a high-inflation cycle, helping central banks to maintain price stability and achieve their inflation objectives. Motivated by concerns about trade tensions in the aftermath of high pandemic-era inflation, we examine the anchoring of consumers’ and professional forecasters’ one-year-ahead inflation expectations for evidence of recent weakening. While the inflation expectations of professional forecasters remain well-anchored, there has been a notable deterioration in consumers’ inflation expectations’ anchoring in 2025 comparable to that in the late 1970s.

Date: 2026
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DOI: 10.26509/frbc-ec-202601

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