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11 posts from March 2015

March 02, 2015

Euro Area Inflation Expectations–Anchors Away?



Euro-inflation

Euro area inflation expectations have been falling at both short- and long-term horizons, with the latter development suggesting the current low inflation environment is perceived as likely to persist. Because long-term inflation expectations play a key role in the decisions of households and firms, economists have stressed the importance of long-term inflation expectations being anchored at a central bank’s target. In this post, we use survey data on inflation forecasts to document evidence of recent “unanchoring” of euro area long-term inflation expectations, and note the difference in comparison to the 2008-09 period, when current inflation and short-term inflation expectations also declined but long-term inflation expectations remained steady.

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Posted by Blog Author at 7:00 AM in Macroecon, Monetary Policy | Permalink | Comments (0)

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