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Despite High Inflation, Longer-Term Inflation Expectations Remain Well Anchored

Author

Listed:
  • Brent Bundick
  • Andrew Lee Smith

Abstract

The Federal Reserve’s long-run 2 percent inflation target is intended to prevent periods of high inflation from becoming embedded in longer-term inflation expectations. However, inflation has remained above the Fed’s target for over three years, increasing the risk that longer-term inflation expectations could become unanchored. Building on our previous research, we study recent market reactions to inflation news and find that longer-term inflation expectations appear to remain well anchored.

Suggested Citation

  • Brent Bundick & Andrew Lee Smith, 2024. "Despite High Inflation, Longer-Term Inflation Expectations Remain Well Anchored," Economic Bulletin, Federal Reserve Bank of Kansas City, pages 1-4, May.
    • Handle: RePEc:fip:fedkeb:98327
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