Forceful or persistent: Wow the ECB's new inflation target affects households' inflation expectations

Mathias Hoffmann, Emanuel Mönch, Lora Pavlova and Guido Schultefrankenfeld
Authors registered in the RePEc Author Service: Emanuel Moench

No 27/2023, Discussion Papers from Deutsche Bundesbank

Abstract: We study how households adjust their medium-term inflation expectations under the new ECB strategy. We find that survey respondents make little difference between the previous strategy of targeting inflation rates close to but below 2% and the new strategy with a symmetric 2% target. Yet, participants informed that the ECB might tolerate rates exceeding the target for some time, expect somewhat higher medium-term inflation. Respondents asked to assume inflation currently running below target place a significantly higher probability on outcomes above 2% in the medium term. Participants do not expect an undershooting when inflation is currently running above target.

Keywords: Monetary Policy Strategy; Household Inflation Expectations; Randomized Control Trial; Survey Data (search for similar items in EconPapers)
JEL-codes: E31 E32 F33 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdps:279574

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