The anchoring of long-term inflation expectations of consumers: insights from a new survey

Gabriele Galati, Richhild Moessner and Maarten van Rooij

Oxford Economic Papers, 2023, vol. 75, issue 1, 96-116

Abstract: We provide new evidence on the level and probability distribution of consumers’ long-term expectations of inflation in the euro area and the Netherlands, using a new monthly representative Dutch survey before and during the COVID-19 pandemic. We find that consumers’ expectations of euro area and Dutch inflation 10 years ahead have not been well anchored at the ECB’s inflation aim of below, but close to 2%. Median expectations have remained elevated above the European Central Bank's (ECB) inflation aim throughout the pandemic. Moreover, individual probability distributions show that expected probabilities of higher inflation (4% or higher) have continuously been larger than those of lower inflation (0% or lower). While policymakers are currently concerned about a possible de-anchoring of inflation expectations on the downside, our results suggest that from a consumer’s point of view de-anchoring of long-term inflation expectations is mainly due to expected high inflation rather than low inflation.

JEL-codes: E31 E58 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: The anchoring of long-term inflation expectations of consumers: insights from a new survey (2021)
Working Paper: The anchoring of long-term inflation expectations of consumers: insights from a new survey (2020)
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