Medium- vs. short-term consumer inflation expectations: Evidence from a new euro area survey

Arbeitspapier

Using the ECB Consumer Expectations Survey, this paper investigates how consumers revise medium-term inflation expectations. We provide robust evidence of their adjustment to the current economic developments. In particular, consumers adjust medium-term inflation views in response to changes in short-term inflation expectations and, to a lesser degree, to changes in perceptions of current inflation. We find that the strong adverse Covid-19 pandemic shock contributed to an increase in consumer inflation expectations. We show that consumers who declare high trust in the ECB adjust their medium-term inflation expectations to a lesser degree than consumers with low trust. Our results increase understanding of expectations formation, which is an important issue for medium-term oriented monetary policy.

Object Details

• ISBN: 978-952-323-380-5
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bank of Finland Research Discussion Papers ; No. 10/2021

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Expectations; Speculations ; Price Level; Inflation; Deflation ; Central Banks and Their Policies
• Subject: Inflation expectations ; consumer survey ; micro-data

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Stanisławska, Ewa ; Paloviita, Maritta
• Event: Veröffentlichung
• (who): Bank of Finland
• (where): Helsinki
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/240350
• Last update: 10.03.2025, 11:41 AM CET