What are inflation expectations? How do our personal experiences shape them? And why do they matter to central banks?

In this episode of The ECB Podcast, our host Stefania Secola and researchers Geoff Kenny and Dimitris Georgarakos discuss how people form expectations about inflation and how we measure them.

The views expressed are those of the speakers and not necessarily those of the European Central Bank.

Published on 26 April 2024 and recorded on 19 April 2024.

In this episode:

01:35 – Inflation expectations
What are inflation expectations, and why do they matter for central banks? How do people form such expectations?

9:25 – The impact on prices
Can inflation expectations shape the prices we end up paying? How might personal perceptions influence wages?

11:30 – Measuring inflation expectations
Why is it important to measure inflation expectations, and how do we do it at the ECB? What were the findings of our latest survey?

16:38 – The role of the ECB
What can the ECB do to inform people’s inflation expectations? And what role can communication play in this?

21:15 – Our guests’ hot tips
ECB researchers Geoff Kenny and Dimitris Georgarakos share their hot tips and some final thoughts with our listeners.

ECB Consumer Expectations Survey
https://www.ecb.europa.eu/stats/ecb_surveys/consumer_exp_survey/html/index.en.html

Working Paper: Tell me something I don’t already know: learning in low and high-inflation settings, March 2024
https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2914~d6a8832bf5.en.pdf?e655c8b68e7c2fb096387a4da34c42e6

Research Bulletin: Recent changes in consumers’ medium-term inflation expectations – a detailed look, February 2023
https://www.ecb.europa.eu/press/research-publications/resbull/2023/html/ecb.rb230224~558beec65c.en.html

Economic Bulletin issue 3/2024: Trust in the ECB – insights from the Consumer Expectations Survey, April 2024
https://www.ecb.europa.eu/press/economic-bulletin/html/eb202403.en.html#toc24

European Central Bank
www.ecb.europa.eu