Global: Inflation Expectations Monitor

The credibility of monetary anchoring is vital to central banks. One important indicator of credibility is inflation expectations. Current elevated headline inflation has caused the monitoring of expectations to be even more crucial. This monthly monitor tracks developments in the most recognised measures of inflation expectations in the US, Euroland, the UK, Norway and Sweden.

Consumer short- and long-term inflation expectations have in general broken the increasing trend. UK short-term and Norway long-term expectations are the only ones to rise recently. If sustained this is comforting news for the central banks.

Forecaster inflation expectations generally remain stable across the surveyed countries. The only exception is Sweden, where the Prospera five-year inflation forecast continues to increase.

Market implied long-term inflation expectations have also declined. Only the UK has risen recently but that was on the back of a sharp decline. France, the UK and Sweden appear to have reversed the sharp increases they previously experienced. US expectations have moved sideways.

Danske Bank
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