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In Recent Years, Inflation Expectations Increased After Oil Shocks and Stabilized Only Once Monetary Policy Tightened

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  • Andrew Glover

Abstract

Historically, U.S. households’ expectations for future inflation remained anchored after an oil price shock without significantly tighter monetary policy. Since 2010, however, oil price shocks have led household inflation expectations to increase more persistently, and expectations have only normalized after monetary policy tightened. This recent experience suggests monetary policy may play a role in stabilizing expectations after a shock.

Suggested Citation

  • Andrew Glover, 2026. "In Recent Years, Inflation Expectations Increased After Oil Shocks and Stabilized Only Once Monetary Policy Tightened," Economic Bulletin, Federal Reserve Bank of Kansas City, pages 1-4, July.
    • Handle: RePEc:fip:fedkeb:103507
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