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Source: International Monetary Fund

Inflation Expectations in the U.S.: Linking Markets, Households, and Businesses

Author/Editor:

Peter D. Williams

Publication Date:

November 13, 2020

. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Inflation has been below the Federal Reserve’s target for much of the past 20 years, creating worries that inflation may be deanchoring from the FOMC’s target. This paper uses a factor model that incorporates information from professional forecasters, household and business surveys, and the market for Treasury inflation protected securities (TIPS) to estimate long-run inflation expectations. These have fallen notably in the past few years (to roughly 1.9 percent for CPI inflation, well below the FOMC’s target). It appears that, even before the covid recession, the private sector viewed the economy as likely to suffer from persistent headwinds to inflation.

Series:

Working Paper No. 2020/240

Frequency:

regular

English

Publication Date:

November 13, 2020

ISBN/ISSN:

9781513561158/1018-5941

Stock No:

WPIEA2020240

Format:

Paper

Pages:

25

Source: International Monetary Fund

Inflation Expectations in the U.S.: Linking Markets, Households, and Businesses

Author/Editor:

Peter D. Williams

Publication Date:

November 13, 2020

. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Inflation has been below the Federal Reserve’s target for much of the past 20 years, creating worries that inflation may be deanchoring from the FOMC’s target. This paper uses a factor model that incorporates information from professional forecasters, household and business surveys, and the market for Treasury inflation protected securities (TIPS) to estimate long-run inflation expectations. These have fallen notably in the past few years (to roughly 1.9 percent for CPI inflation, well below the FOMC’s target). It appears that, even before the covid recession, the private sector viewed the economy as likely to suffer from persistent headwinds to inflation.

Series:

Working Paper No. 2020/240

Frequency:

regular

English

Publication Date:

November 13, 2020

ISBN/ISSN:

9781513561158/1018-5941

Stock No:

WPIEA2020240

Format:

Paper

Pages:

25

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