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 ?
Thus, the recent medium-term forecasts of the Central Bank of Tunisia (BCT) have slightly lowered the expected inflation rate for 2019 as a whole to 6.9% from 7.3% in 2018.
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.
According to the report the simplest way to de-construct a long-term bond yield is to split it into the expected inflation rate that is expected to prevail over the lifetime of the bond and the remaining 'real' yield that is real, inflation-adjusted return that bond holders demand.
The expected inflation rate over the next ten years implied by the inflation-indexed bonds rose 0.3 percentage points in the 14 months after July 2016, but then increased 0.8 percentage points in the next five months.
However, this average inflation actually changed to around 7% and it brought down the money value by an extra 2% over the expected inflation rate.
Generally, the factors which influence the rate of savings in the economy include economic growth, rise in per capita income, favorable demographic structure, prudent fiscal stance, positive real returns, expected inflation rate, development of the financial sector, and cultural and psychological issues.
See, there's this little thing called inflation and, unfortunately, when it comes to equipping and maintaining a modern, cutting-edge military force worthy of working with our current high-tech allies, the expected inflation rate runs a little higher than the annual increase in the price of kumquats at the local grocer.
According to November's survey, the expected inflation rate of the end of the next 12 months is already at 7.4 percent, up from 7.2 percent in October.
He said the expected inflation rate for the next five years will be around 1.9% in both Germany and the U.S., and the yield will be about 200 basis points lower in Germany.
Our PPM measures the probability that the expected inflation rate (12-month percent changes) over the next 12 months--the forecast horizon--will exceed 2.5 percent.
The International Monetary Fund (IMF) expected inflation rate in Sudan to drop to 29% by the end of 2014 from 47% in July as the one-off effects of the September 2013 fuel price increases dissipate.

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