Survey analysis of the financial market’s inflation expectations
Economic Commentaries, News An analysis of the Riksbank’s various surveys of inflation expectations shows that the money market participants’ long-term inflation expectations, on average, have been close to the inflation target of 2 per cent since 2010.
This Economic Commentary summarises a number of results from a decade of surveys of inflation expectations conducted on behalf of the Riksbank since 1995, when the inflation target of 2 per cent was introduced. The investigation has been carried out by Gustaf Lundgren, economist at the Riksbank’s Division for Macrofinancial Analysis, who also describes how the surveys have developed and how they differ from the inflation expectation questions in the Economic Tendency Survey.
The investigation also describes the measure “disagreement”, which is an important concept in the academic literature. Disagreement in the responses usually increases in conjunction with economic downturns – as has happened recently during the coronavirus pandemic. If disagreement is linked to the anchorage of the inflation target, it may be relevant to the Riksbank’s policy work, even if caution should be exercised in drawing far-reaching conclusions from what are only tendencies in a relatively limited dataset.
Read more in the Economic Commentary “Survey-based inflation expectations”.