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Recent Developments in Measuring Inflation Expectations: With a Focus on Market-based Inflation Expectations and the Term Structure of Inflation Expectations

Ko Adachi and Kazuhiro Hiraki
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Ko Adachi: Bank of Japan
Kazuhiro Hiraki: Bank of Japan

No 21-E-1, Bank of Japan Research Laboratory Series from Bank of Japan

Abstract: Economic surveys and the market price of inflation-linked assets are two major sources for gauging inflation expectations. Recent studies have developed methodologies that use various indicators to estimate underlying inflation expectations and their term structure. This article reviews recent research on inflation expectations, with a focus on Hiraki and Hirata's (2020) study on market-based inflation expectations, and Maruyama and Suganuma's (2019) study on the term structure of inflation expectations. We also describe recent movements in inflation expectations in Japan. Overall, inflation expectations weakened somewhat after the outbreak of COVID-19 in early 2020, but they have been more or less unchanged in recent months. Given the great uncertainty over the consequences of COVID-19 and their impact on domestic and overseas economies, future developments in inflation expectations will also continue to be highly uncertain. It is therefore important to continue monitoring the various indicators of inflation expectations by considering their characteristics.

Keywords: Inflation expectations; Survey-based inflation expectations; Breakeven inflation rate (search for similar items in EconPapers)
JEL-codes: C32 D84 E31 E43 E52 G12 (search for similar items in EconPapers)
Date: 2021-06-25
New Economics Papers: this item is included in nep-cwa, nep-mac and nep-mon
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