You are here

Economics in a picture

Economics in a picture

Euro area inflation expectations of professional forecasters remain well anchored


Economics in a picture: Since 2011, government spending as a percentage of GDP recorded a significant decline


Since 2013, euro area inflation has remained at low levels, both in historical terms and in comparison with the ECB’s price stability objective. If long-term inflation expectations are well-anchored, these deviations of inflation from the central bank’s objective should be transitory, and inflation should gradually converge to that objective. In that case, negative surprises in observed inflation may transmit into lower short-run inflation expectations, but not into revisions of long-term expectations. It is therefore common to test if there is no significant relationship between short and long-term expectations as a way of assessing if long-term expectations are well-anchored.

In the ECB’s Survey of Professional Forecasters, long-term expectations (4/5 years ahead) declined after 2013, but remained between 1.8% and 2.0%. In addition, the relationship between revisions in short-term expectations (for the current year) and long-term expectations continued to be significant only for a small fraction of individuals. This result suggests that expectations from this survey remain relatively well-anchored. Nevertheless, it should be noted that some researchers have found some signs of de-anchoring using this approach, especially when using inflation expectations extracted from financial market instruments.


For more details see Garcia and Iskrev (2019): “Inflation expectations in the Survey of Professional Forecasters: An exploratory analysis”, published in Banco de Portugal Economic Studies (Vol. 5, N. 2).

Prepared by Joana Garcia and Nikolay Iskrev. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.


If you want to receive an e-mail whenever a new “Economics in a picture” is published send your request to