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Working Paper

Thinking Outside the Box: Do SPF Respondents Have Anchored Inflation Expectations?

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Despite the stability of the median 10-year inflation expectations in the Survey of Professional Forecasters (SPF) near 2 percent, we show that not a single SPF respondent’s expectations have been anchored at the target since the Federal Open Market Committee’s (FOMC) enactment of an inflation target in January 2012, or even since 2015. However, we find significant evidence for “delayed anchoring,” or a move toward being anchored, particularly after the federal funds rate lifted off in December 2015.
Topics
Econometrics, modeling, and forecasting
Inflation
08.20.2019ISSN 2573-7953 WP 19-15DOI 10.26509/frbc-wp-201915
Keywords inflation expectations, persistent disagreement, credibility, delayed anchoring
JEL Classification Codes E37, E31, E7, E52

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Binder, Carola Conces, Wesley Janson, and Randal J. Verbrugge. 2019. “Thinking Outside the Box: Do SPF Respondents Have Anchored Inflation Expectations?” Federal Reserve Bank of Cleveland, Working Paper No. 19-15. https://doi.org/10.26509/frbc-wp-201915