Inflation expectations shaped by different forces in short and long term – BoE research
UK households are more influenced by perceptions of actual inflation at short horizons
Perceptions of current inflation are important in forming expectations among households, but other factors gain importance when they assess the longer-run, a bulletin article published by the Bank of England today (July 12) finds.
The article, by Jeremy Rowe, entitled How are households' inflation expectations formed? uses survey data to examine the factors behind expectations of inflation one and five years ahead.
The most important factor reported at both horizons is "recent price changes in
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