Inflation Expectations Stable, Suggests New Gauge from Cleveland Fed Researcher

Inflation Expectations Stable, Suggests New Gauge from Cleveland Fed Researcher

A new method of gauging inflation expectations and real interest rates provides some evidence that longer-term inflation expectations remain near historic lows, in the neighborhood of 2 percent. This suggests that the expansion of the Federal Reserve's balance sheet has not unanchored the public's expectations of inflation, says one of the developers of the model, Federal Reserve Bank of Cleveland researcher Joseph Haubrich.

According to Haubrich, the model provides:

* estimates of expected inflation from one month to 30 years.

* an estimate of the inflation risk premium.

* a measure of real interest rates, including a short (one month) rate, not readily available from the TIPS market.

For more information, read
 A New Approach to Gauging Inflation Expectations.