Household Inflation Expectations: The Term Structure and the Anchor Effects of Monetary Policy

Koichiro Kamada and Jouchi Nakajima

No 15-E-5, Bank of Japan Research Laboratory Series from Bank of Japan

Abstract: The management of inflation expectations is one of the means by which central banks aim to achieve price stability. This is the reason why central bankers are required to have a deep understanding of the dynamics of inflation expectations. Kamada et al. (2015) examined a household survey and found that short-term and long-term inflation expectations behave differently: short-term expectations are easily affected by actual inflation, while long-term expectations are stable and immune to actual price developments. This result indicates that inflation expectations are anchored to a certain level in Japan from the long term point of view. Long-term expectations, however, are changeable and influenced by monetary policy. The price stability target and quantitative and qualitative monetary easing introduced by the Bank of Japan in 2013 are likely to raise and stabilize inflation expectations in Japan.

Keywords: Inflation expectations; Term structure; Inflation target; Inflation anchor; Quantitative and qualitative monetary easing (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Date: 2015-09-30
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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