The primary objective of the ECB’s monetary policy is to maintain price stability. The ECB aims at inflation rates of below, but close to, 2% over the medium term. But what are the inflation expectations of the general public and the markets? These have been measured in two different ways. Economist Gabriele Galati opted for a new approach. The first research results have just come in. Time for an interview with this DNB researcher.
In the survey you measure the inflation expectations for the euro area. Each week, you send questionnaires to a group of respondents. When did the survey start?
'Between June 2009 and June 2010 we emailed 129 survey participants a questionnaire each week asking them about their inflation expectations at different horizons. We are still continuing with this survey, albeit with a smaller group of respondents. This is part of one of three research projects we are conducting on inflation expectations.'
Actual inflation rose from 1.1% to 2.2% in the euro area for the whole of 2010. Was this in line with respondents’ expectations in the survey?
'In 2009 and 2010, survey participants expected inflation in 2010 to come out below below 2%. This figure is the average of three groups of respondents: students, academics and colleagues at DNB.'