Inflation expectations help in analysing the euro area inflation outlook
Oinonen, Sami; Vilmi, Lauri (16.09.2021)
JulkaisusarjaBank of Finland. Bulletin
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-202111092084
Inflation is recovering from an exceptional decline caused by the COVID-19 crisis. For monetary policy and price stability, it is more important to assess inflation developments over the medium term rather than short-term fluctuations. According to the latest research, inflation expectations play a key role in inflation projections and thus contribute to understanding inflation developments over the medium term. At present, different measures of inflation expectations rather consistently point towards inflation remaining below the ECB's target in the coming years. Different measures of expectations should nonetheless be monitored widely; for example, during the depths of the COVID-19 crisis in 2020, market-based inflation expectations pointed towards a substantially more subdued inflation outlook than survey-based expectations.
The accessible version: https://www.bofbulletin.fi/en/2021/4/inflation-expectations-help-in-analysing-the-euro-area-inflation-outlook/