Anna Breman: New research on the psychology of inflation valuable when addressing monetary policy challenges

"Households' inflation expectations tend to be overlooked in the monetary policy analysis, as they are often higher than measured inflation. However, new research shows that households' inflation expectations are important. Households' expectations affect consumption, investment and saving, factors that are important both for inflation and the transmission of monetary policy and therefore matter for monetary policy both in the short and longer term", Breman explains.

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