A Deflationary Drift in Euro Area's Inflation Expectations?
10 Pages Posted: 1 Feb 2015
Date Written: October 1, 2014
This study assesses the degree of anchoring, i.e. stability, of long-term inflation expectations in the Euro area based on direct survey based evidence and latest data from the ECB’s Survey of Professional Forecasters. Consideration of the evolution of the entire distribution of inflation expectations in the long and medium term points to substantial downside risks to price stability providing justification for recent monetary policy decisions, as well as further undiminished vigilance.
Keywords: forecast expectations and heterogeneity, forecast probability distribution, learning, structural evolution.
JEL Classification: E31, E32, E37, E52, E58.
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