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Are household inflationary expectations forward-looking?

Updated : February 20, 2019 09:26 AM IST

The next RBI monetary policy will be announced in April.
Data suggests that household inflationary expectations adapt to changes in inflation rather than predict the future trajectory of inflation.
Bottom line then is that the household inflationary expectations only tell us what households think has happened to inflation and what households think has happened to inflation mirrors the actual movement in reported CPI data, with a lag of around 2 quarters.
Are household inflationary expectations forward-looking?

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