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Household Inflation Expectations: The Term Structure and the Anchor Effects of Monetary Policy

Author

Listed:
  • Koichiro.Kamada

    (Bank of Japan)

  • Jouchi Nakajima

    (Bank of Japan)

Abstract

The management of inflation expectations is one of the means by which central banks aim to achieve price stability. This is the reason why central bankers are required to have a deep understanding of the dynamics of inflation expectations. Kamada et al. (2015) examined a household survey and found that short-term and long-term inflation expectations behave differently: short-term expectations are easily affected by actual inflation, while long-term expectations are stable and immune to actual price developments. This result indicates that inflation expectations are anchored to a certain level in Japan from the long term point of view. Long-term expectations, however, are changeable and influenced by monetary policy. The price stability target and quantitative and qualitative monetary easing introduced by the Bank of Japan in 2013 are likely to raise and stabilize inflation expectations in Japan.

Suggested Citation

  • Koichiro.Kamada & Jouchi Nakajima, 2015. "Household Inflation Expectations: The Term Structure and the Anchor Effects of Monetary Policy," Bank of Japan Research Laboratory Series 15-E-5, Bank of Japan.
    • Handle: RePEc:boj:bojlab:lab15e05
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    Keywords

    Inflation expectations; Term structure; Inflation target; Inflation anchor; Quantitative and qualitative monetary easing;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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