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.

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.
References in periodicals archive ?
The Bank said it expected inflation to fall below zero before picking up "notably" towards the end of the year as the effect of lower oil and food prices fades.
BAM's governor, who was speaking at a press conference following the Bank's council meeting, expected inflation to stand at 0.
The latest estimate of 10-year expected inflation is 1.
The apex bank said that it expected inflation to fall close to its 5 percent target by the end of 2014.
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.
The level surprised analysts who had expected inflation to be broadly in line with July's level.
Comments from Governor Isarescu last week alluding to a lower than expected inflation trajectory had already led us to change our monetary policy outlook.
The FOMC said it continued "to see downside risks to the economic outlook," and that it expected inflation over the medium term would run "at or below" the central bank's 2.
The Bank said that they expected inflation to go up to 2.
This means that the nominal interest rate can be separated into the real rate plus the expected inflation rate, In other words, if investors hope to get a real return of 3 percent on what they lend, and they expect inflation to be 2 percent, they charge 5 percent interest.
He also said he expected inflation averaging around 1.
Probability quantification methods, based on the influential Carlson and Parkin (1975) concept, are commonly used to derive numerical estimates of perceived and expected inflation on the basis of qualitative survey data.

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