The Anchoring of Long-Term Inflation Expectations of Consumers: Insights from a New Survey

Galati, Gabriele; Moessner, Richhild; Rooij, Maarten van

doi:10.2139/ssrn.3633867

Cited by 4 publications

(2 citation statements)

References 27 publications

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“…International surveys investigating the degree of knowledge about the central bank's policy objective among households show that, in general, consumers are not aware of the central bank's inflation aim (Binder and Rodrigue, 2018;Coibion et al, 2019a;Bottone et al, 2021a;Christelis et al, 2020). On average, their inflation expectations exceed the inflation target (Coibion et al, 2019a;Galati et al, 2020a). Rumler and Valderrama (2020) show that consumers' knowledge about inflation affects the size, accuracy and uncertainty of their inflation expectations.…”

Section: Evidence On the Public Understanding Of The Inflation Objective Formulationmentioning

confidence: 97%

The Ecb's Price Stability Framework: Past Experience, and Current and Future Challenges

Cecion¹,

Coenen²,

Gerke³

et al. 2021

SSRN Journal

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The ECB's price stability mandate has been defined by the Treaty. But the Treaty has not spelled out what price stability precisely means. To make the mandate operational, the Governing Council has provided a quantitative definition in 1998 and a clarification in 2003. The landscape has changed notably compared to the time the strategy review was originally designed. At the time, the main concern of the Governing Council was to anchor inflation at low levels in face of the inflationary history of the previous decades. Over the last decade economic conditions have changed dramatically: the persistent low-inflation environment has created the concrete risk of de-anchoring of longer-term inflation expectations. Addressing low inflation is different from addressing high inflation. The ability of the ECB (and central banks globally) to provide the necessary accommodation to maintain price stability has been tested by the lower bound on nominal interest rates in the context of the secular decline in the equilibrium real interest rate. Against this backdrop, this report analyses: the ECB's performance as measured against its formulation of price stability; whether it is possible to identify a preferred level of steady-state inflation on the basis of optimality considerations; advantages and disadvantages of formulating the objective in terms of a focal point or a range, or having both; whether the medium-term orientation of the ECB's policy can serve as a mechanism to cater for other considerations; how to strengthen, in the presence of the lower bound, the ECB's leverage on private-sector expectations for inflation and the ECB's future policy actions so that expectations can act as 'automatic stabilisers' and work alongside the central bank.

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Section: Evidence On the Public Understanding Of The Inflation Objective Formulationmentioning

confidence: 97%

The Ecb's Price Stability Framework: Past Experience, and Current and Future Challenges

Cecion¹,

Coenen²,

Gerke³

et al. 2021

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…There is much less understanding of how the wider public perceives monetary policy objectives. According to the available literature and surveys, firms and households are, for the most part, unaware of central bank monetary policy targets and strategies, and their expectations and perceptions of inflation are not well anchored to the central bank's aims (Coibion et al, 2019b;Galati et al, 2020).…”

Section: Communication On Objectives and Strategymentioning

confidence: 99%

Clear, Consistent and Engaging: ECB Monetary Policy Communication in a Changing World

Assenmacher¹,

Glöckler²,

Holton³

et al. 2021

SSRN Journal

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This paper examines the importance of central bank communication in ensuring the effectiveness of monetary policy and in underpinning the credibility, accountability and legitimacy of independent central banks. It documents how communication has become a monetary policy tool in itself; one example of this being forward guidance, given its impact on inflation expectations, economic behaviour and inflation. The paper explains why and how consistent, clear and effective communication to expert and non-expert audiences is essential in an environment of an ever-increasing need by central banks to reach these audiences. Central banks must also meet the demand for more understandable information about policies and tools, while at the same time overcoming the challenge posed by the wider public's rational inattention. Since the European Central Bank was established, the communications landscape has changed dramatically and continues to evolve. This paper outlines how better communication, including greater engagement with the wider public, could help boost people's understanding of and trust in the Eurosystem.

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Households’ inflation expectations and concern about climate change

Meinerding,

Poinelli,

Schüler

2023

European Journal of Political Economy

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The Anchoring of Long-Term Inflation Expectations of Consumers: Insights from a New Survey

Cited by 4 publications

References 27 publications

The Ecb's Price Stability Framework: Past Experience, and Current and Future Challenges

The Ecb's Price Stability Framework: Past Experience, and Current and Future Challenges

Clear, Consistent and Engaging: ECB Monetary Policy Communication in a Changing World

Households’ inflation expectations and concern about climate change

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