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.

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.218.1892