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Inflation expectations anchoring: new insights from micro evidence of a survey at high-frequency and of distributions

Author

Listed:
  • Nikos Apokoritis
  • Gabriele Galati
  • Richhild Moessner
  • Federica Teppa

Abstract

We shed new light on the anchoring of long-term euro area inflation expectations since the crisis by using micro evidence from a new survey at high (weekly) frequency. We find that long-term inflation expectations remained well anchored to the ECB's inflation aim, which has acted as a focal point. By contrast, we find no evidence that professional forecasts (reported by Consensus Economics) acted as focal points. But there are subtle signs of long-term inflation expectations not being perfectly well-anchored. Using measures based on the distribution of inflation expectations from a quarterly survey, namely uncertainty based on the full distribution, the probability of expected long-term inflation lying between 1.5% and 2.5%, and the effect of short-term on long-term deflation risk, we find that long-term euro area inflation expectations have remained well-anchored, and have become better-anchored between 2011 and 2018.

Suggested Citation

  • Nikos Apokoritis & Gabriele Galati & Richhild Moessner & Federica Teppa, 2019. "Inflation expectations anchoring: new insights from micro evidence of a survey at high-frequency and of distributions," BIS Working Papers 809, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:809
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    References listed on IDEAS

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    Cited by:

    1. Richhild Moessner & Előd Takáts, 2020. "How well-anchored are long-term inflation expectations?," BIS Working Papers 869, Bank for International Settlements.
    2. 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.
    3. Stanisławska, Ewa & Paloviita, Maritta, 2021. "Medium- vs. short-term consumer inflation expectations: Evidence from a new euro area survey," Bank of Finland Research Discussion Papers 10/2021, Bank of Finland.
    4. Stanisławska, Ewa & Paloviita, Maritta, 2021. "Responsiveness of consumers' medium-term inflation expectations : evidence from a new euro area survey," Research Discussion Papers 10/2021, Bank of Finland.
    5. Baumann, Ursel & Darracq Pariès, Matthieu & Westermann, Thomas & Riggi, Marianna & Bobeica, Elena & Meyler, Aidan & Böninghausen, Benjamin & Fritzer, Friedrich & Trezzi, Riccardo & Jonckheere, Jana & , 2021. "Inflation expectations and their role in Eurosystem forecasting," Occasional Paper Series 264, European Central Bank.
    6. Gabriele Galati & Richhild Moessner & Maarten van Rooij, 2021. "Anchoring of consumers’ long-term euro area inflation expectations during the pandemic," Working Papers 715, DNB.
    7. repec:zbw:bofrdp:2021_010 is not listed on IDEAS
    8. Gunda‐Alexandra Detmers & Sui‐Jade Ho & Özer Karagedikli, 2022. "Understanding Consumer Inflation Expectations during the COVID‐19 Pandemic," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(1), pages 141-154, March.

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    More about this item

    Keywords

    inflation expectations;

    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
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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