What are inflation expectations?
Inflation expectations are forecasts of future price growth held by households, firms or analysts.
Definition, calculation and mechanism
Surveys and some market measures estimate them, with horizon and method affecting results. Expectations can influence wage negotiations, pricing and savings. Market indicators may also incorporate risk premia and liquidity.
Interpretation, examples and limits
Recent inflation influences expectations but is not destiny. A group average can hide disagreement. Policy credibility and new shocks can shift expectations.
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