Monetary Policy Communications and Their Effects on Household Inflation Expectations
64 Pages Posted: 16 Jan 2019 Last revised: 17 Sep 2019
Date Written: September 12, 2019
We study how different forms of communication influence inflation expectations in a randomized controlled trial using nearly 20,000 U.S. individuals. We elicit individuals’ inflation expectations in the Nielsen Homescan panel then provide eight different forms of information regarding inflation. Reading the actual Federal Open Market Committee (FOMC) statement has about the same average effect on expectations as simply being told about the Federal Reserve’s inflation target. Reading a news article about the most recent FOMC meetings results in a forecast revision which is smaller by half. Our results have implications for how central banks should communicate to the broader public.
Keywords: expectations management, inflation expectations, surveys, communication, randomized controlled trial
JEL Classification: E31, C83, D84
Suggested Citation: Suggested Citation