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 ?
Fiscal 2014 saw "a tangible improvement in the country's foreign exchange reserves, unprecedented appreciation in the value of the rupee in early March, reduction in the fiscal deficit, lower than expected inflation rate, improvement in the private sector credit take-off and relatively constrained current account deficit, the central banks also says.
the average 30-year fixed mortgage rate, adjusted for inflation by subtracting the expected inflation rate as reported in the Survey of Professional Forecasters).
Simulation results imply that the economy would never fail to experience greater inflation in the near future if the government attempts to accumulate its public debt in the case in which the central bank cannot have the effective instrument to pin down the expected inflation rate.
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.
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.
Zadornov said, 'According to our estimates, the (key) rate will be decreased in the first quarter of 2015 as the rate is much higher than the expected inflation rate.
According to November's survey, the expected inflation rate of the end of the next 12 months is already at 7.
The lower expected inflation rate translates into lower expected interest rates as well, with the forecast for the 10-year Treasury-bond rate averaging 7 percent in both 1992 and 1993, compared with 7.
R(T) = r(T) + expected inflation rate + risk premium (3)
Last year agricultural producers dealt with a drawn out period of draught that drastically weakened yields, drove up prices and significantly impacted the higher than expected inflation rate.
This movement in the real funds rate is corroborated by the Pennacchi model, which adjusts for inflation statistically, using survey expectations and estimates for both the expected inflation rate and the estimated real funds rate.
To start, the expected inflation rate will be a weighted average of the inflation rate delivered by a high-inflation Fed (around 10 percent) and that delivered by a low-inflation Fed (less than 10 percent), where the weights are given by the probabilities that the public assigns to the Fed's being a high or low-inflation type.

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