Anchoring of inflation expectations: has past progress paid off?

Key takeaways

• In the decade before the pandemic, inflation expectations became less volatile worldwide, as well as more consistent with inflation targets and less sensitive to inflation surprises.
• This progress has paid off for many economies during the past year's surge in inflation: long-term expectations have remained largely anchored, but with notable exceptions.
• Anchored expectations provide room for monetary policy manoeuvre, but how strongly they remain anchored will depend on central banks keeping inflation in line with their stated objectives.

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The views expressed in this publication are those of the authors and not necessarily those of the BIS.