Powell Doesn't See Inflation Expectations Running North of Mandate

Q: Re divide between market and professional economists' inflation expectations, vs laypersons' expectations

- A: Re household surveys, the NY Fed survey, seems like there is a high correlation between three-year and one-year. For the most part, surveys are showing that households expect higher inflation in the near term but not in the longer term which is also what expectations are showing.

• That is why we have this thing called the CIE which is an index market-based measures, professional forecasters and household surveys. It doesn't doesn't have a lot of grand theory about it. You put them all in and measure the change and you measure dispersion and all of those things.
• It tells a story of inflation expectations moving up. Many of the different measures will also show inflation expectations moving back up to where they were back in 2013.
• We spend a lot of time watching inflation expectations. If we see them running up above levels consistent with our mandate we would react to that. We don't really see that now. We see more of a moderate increase, that is welcome. Inflation expectations had drifted down and it's good to see them get back up a bit. We watch carefully.