Journal Article

Monetary policy actions, macroeconomic data releases, and inflation expectations

Abstract: This article analyzes how announced surprises in monetary policy actions and macroeconomic data releases affect the average rate of inflation that economic agents expect to prevail over the 10-year period following the surprise. The analysis also addresses the effect of Federal Reserve communication and surprises in monetary policy actions on perceived inflation risk over this 10-year period. The study shows that surprises in macroeconomic data releases and monetary policy actions indeed affect the expected rate of inflation. Further, there is evidence that surprises in monetary policy actions increase perceived inflation risk, whereas Federal Reserve communication reduces it.

Keywords: Inflation (Finance); Monetary policy; Macroeconomics;

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Review

Publication Date: 2004

Volume: 86

Issue: May

Pages: 9-22