Year-on-year CPI headline inflation is expected to be lower as of a year from now, ranging from 4.2% to 6.8%.

Figure 1: CPI inflation year-on-year (black), median expected from Survey of Professional Forecasters (blue +), median expected from Michigan Survey of Consumers (red), median from NY Fed Survey of Consumer Expectations (light green), forecast from Cleveland Fed (pink), mean from Coibion-Gorodnichenko firm expectations survey [light blue squares]. Source: BLS, University of Michigan via FRED and Investing.comReutersPhiladelphia Fed Survey of Professional ForecastersNY FedCleveland Fed and Coibion and Gorodnichenko

Note that while professional forecasters’ (mean) forecasts are typically exhibit less bias and lower RMSFE, they have not done so over the last year and a half (post). More on forecasts and encompassing here. Lots of detail on firm/household inflation expectations from Weber,  D’Acunto, Gorodnichenko and Coibion in a recent paper.

Keep reading this article on Econbrowser Blog - James Hamilton & Menzie Chinn.

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