Despite High Inflation, Longer-Term Inflation Expectations Remain Well Anchored

Brent Bundick and Andrew Smith

Economic Bulletin, 2024, 4

Abstract: The Federal Reserve’s long-run 2 percent inflation target is intended to prevent periods of high inflation from becoming embedded in longer-term inflation expectations. However, inflation has remained above the Fed’s target for over three years, increasing the risk that longer-term inflation expectations could become unanchored. Building on our previous research, we study recent market reactions to inflation news and find that longer-term inflation expectations appear to remain well anchored.

Keywords: inflation; inflation target; inflation expectation (search for similar items in EconPapers)
Date: 2024
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