URL:
https://www.researchgate.net/profile/Silu-Muduli/publication/366528948_Assessing_Inflation_Expectations_Adjusting_for_Households'_Biases/links/63a53da3a03100368a2000c5/Assessing-Inflation-Expectations-Adjusting-for-Households-Biases.pdf
Authors:
Silu Muduli
RBI
G V Nadhanael
RBI
Sitikantha Pattanaik
RBI
Published:
Dec 2022
JEL Codes:
JEL code(s) not specified.
Versions:
● Assessing Inflation Expectations Adjusting for Households Biases
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Post-COVID, supply shock-induced spike in inflation in India has spawned renewed research interest in assessing the extent to which inflation expectations are anchored to the inflation target, given its importance to securing price stability in the medium-run. This article constructsa bias-adjusted household inflation expectations series to show that such a measure contains useful forwardlooking information for predicting headline inflation. It also presents an inflation expectation anchoring (IEA) index to highlight the significance of the flexible inflation targeting (FIT) framework to firmer anchoring of expectations and the role of repeated supply shocks inposing the risk of de-anchoring expectations.

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