Bulletin – March Quarter 2017 Inflation Expectations in Advanced Economies Abstract
Anchored inflation expectations are important for price stability because expectations affect current actions. Although all inflation expectations measures provide some information about future inflation, professional forecasters have been the most accurate in predicting future inflation, while market-implied and consumer measures have tended to be less so. Recent declines in inflation expectations have been concentrated in the measures that have historically been less accurate predictors. The more accurate measures have been more stable and have remained close to central banks’ inflation targets.