Year: 2022
Type: article
Abstract: Since the Federal Open Market Committee announced a 2% inflation target in 2012, the median long‐run inflation forecast of professional forecasters has been near target. We show, however, that most individual forecasters' long‐run inflation expectations fluctuate substantially, with sizeable departures from target. We propose a new “bounds anchoring” indicator based on deviations of individuals' long‐run forecasts from target. This indicator sheds new light on gradual changes in expectations since the 2012 announcement. We find that bounds anchoring gradually strengthened in the years following the target announcement, but that this trend has recently started to reverse.
DOI: 10.1111/jmcb.12968
Authors: CAROLA BINDER, WESLEY JANSON, RANDAL VERBRUGGE
Institution: University of Chicago
Language: English
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4293776957