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Press Release

New measure created by Cleveland Fed shows 5-year inflation expectations have re-anchored near 2 percent target

After becoming unanchored during the pandemic, five-year inflation expectations fell rapidly in early 2023 and are once again anchored near the Federal Reserve’s 2 percent target, judging by a new method of measuring inflation anchoring created by the Federal Reserve Bank of Cleveland’s Center for Inflation Research.

In “The Anchoring of US Inflation Expectations Since 2012,” Cleveland Fed researchers Kristoph Naggert and Robert Rich along with Joseph Tracy from the American Enterprise Institute use the new measure – which combines two previous measures into one – to analyze PCE inflation predictions from the Philadelphia Fed’s Survey of Professional Forecasters.

Those predictions slowly moved closer to the Fed’s 2 percent target from 2012 through 2020. When inflation began to surge in 2021, longer-term predictions barely budged, but predictions for the five-year horizon rose dramatically before falling just as quickly back toward the 2 percent target in 2023.

“The respective behavior of the overall anchoring measures at the two horizons is consistent with an outlook by SPF respondents that higher inflation would, in fact, turn out to be transitory,” they write.

Read the Economic Commentary: The Anchoring of US Inflation Expectations Since 2012

More on inflation: Center for Inflation Research

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,, 513.218.1892