Expected rate of inflation

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Expected rate of inflation

The public's expectations for inflation. These expectations determine how large an effect a given policy action by the Fed will have on economic activity.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Expected Rate of Inflation

Investor and public expectations of current or future inflation. These expectations may or may not be rational, but they may affect how the market reacts to changes in target interest rates. For example, the market usually responds well to a cut in interest rates, but if investors expect inflation to go higher in the near future and the Federal Reserve cuts rates, the market may not react positively.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
The data have added to Fed rate cut expectations, though the fly in the ointment is the pop up in the 12-month expected inflation rate in the consumer confidence report, as weak inflation is the main predicate behind the doves' argument for an easing.
Last month, central bank governor Marwan Abbasi said he expected inflation to fall to 6.8 percent, or 6.9 percent in 2019, from 7.5 percent in 2018, after the central bank's decision to raise its benchmark interest rate.
The Department of Finance (DOF) earlier said that rice was the culprit for higher than expected inflation this year as the agency noted that the contribution of the staple food to the rate of increase in consumer prices skyrocketed by tenfold.
The Egyptian government expected inflation to decline by the end of 2017/2018 from 17 percent to 13 percent, according to former Minister of Finance Amr el-Garhy.
Since start of the y ear expected inflation declined by 1.1%.
Statista, an online statistics, market research, and business intelligence portal, issued a report on the expected inflation rates in the Egyptian market over the coming four years.
More recently, with many central banks such as the Federal Reserve starting to face the ZLB and to cope with weak economic demand, many policy proposals have been made based on the perception that an increase in expected inflation is a good thing to stimulate economic activity.
The latest estimate of 10-year expected inflation is 1.87 percent, according to the Federal Reserve Bank of Cleveland.
These include the simple Phillips curve and the expectations-augmented Phillips curve that shows unemployment as a function of the difference between actual and expected inflation e.g., (Gozgor, 2013; Catik, Martin, & Onder, 2011).
The International Monetary Fund in its Regional Economic Outlook Update in June said expected inflation figures for the UAE for the year stand at a mere 1.6 per cent, the least in the Menap region.
The level surprised analysts who had expected inflation to be broadly in line with July's level.

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