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

Author

Listed:
  • Gabriele Galati
  • Richhild Moessner
  • Maarten van Rooij

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.

Suggested Citation

  • Gabriele Galati & Richhild Moessner & Maarten van Rooij, 2023. "The anchoring of long-term inflation expectations of consumers: insights from a new survey," Oxford Economic Papers, Oxford University Press, vol. 75(1), pages 96-116.
    • Handle: RePEc:oup:oxecpp:v:75:y:2023:i:1:p:96-116.
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    File URL: http://hdl.handle.net/10.1093/oep/gpac005
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    Cited by:

    1. Meinerding, Christoph & Poinelli, Andrea & Schüler, Yves, 2022. "Inflation expectations and climate concern," Discussion Papers 12/2022, Deutsche Bundesbank.
    2. Sascha Möhrle, 2020. "New Evidence on the Anchoring of Inflation Expectations in the Euro Area," ifo Working Paper Series 337, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Carin van der Cruijsen & Anna Samarina, 2021. "Trust in the ECB in turbulent times," Working Papers 722, DNB.
    4. van der Cruijsen, Carin & de Haan, Jakob & van Rooij, Maarten, 2025. "The association of high perceived inflation with trust in national politics and central banks✰," Journal of Banking & Finance, Elsevier, vol. 171(C).
    5. Nickel, Christiane & Kilponen, Juha & Moral-Benito, Enrique & Koester, Gerrit & Ciccarelli, Matteo & Enders, Almira & Holton, Sarah & Landau, Bettina & Venditti, Fabrizio & Bobeica, Elena & Brand, Cla, 2025. "A strategic view on the economic and inflation environment in the euro area," Occasional Paper Series 371, European Central Bank.
    6. Joris Wauters & Zivile Zekaite & Garo Garabedian, 2024. "Owner-occupied housing costs, policy communication, and inflation expectations," Working Paper Research 449, National Bank of Belgium.
    7. Gabriele Galati & Richhild Moessner & Maarten van Rooij, 2021. "Anchoring of consumers’ long-term euro area inflation expectations during the pandemic," Working Papers 715, DNB.
    8. Meinerding, Christoph & Poinelli, Andrea & Schüler, Yves, 2023. "Households’ inflation expectations and concern about climate change," European Journal of Political Economy, Elsevier, vol. 80(C).

    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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