Cleveland Fed Researchers Propose ‘A New Measure of Consumers’ (In)Attention to Inflation’

A new measure of consumers’ attention to inflation has potential implications for how closely policymakers should track the inflation expectations of “attentive” consumers.

In the Economic Commentary, “A New Measure of Consumers’ (In)Attention to Inflation,” Federal Reserve Bank of Cleveland researchers Hana Braitsch and James Mitchell use data from a daily Cleveland Fed survey to develop the new measure of attention. Specifically, the researchers look for consistency between two differently worded questions about inflation expectations to assess whether the respondents are attentive or inattentive to inflation.

“With consumers more alert to inflation, their expectations are more informative, likely to be less sticky, and so should be tracked closely by policymakers when assessing inflationary pressures in the economy,” Braitsch and Mitchell say. “They represent consumers’ more-considered views of what will happen to inflation.”

Read the Economic Commentary: A New Measure of Consumers’ (In)Attention to Inflation

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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.

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