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The reaction of inflation forecasts to news about the Fed

Author

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  • Mazumder, Sandeep
Abstract
It is critical for the Federal Reserve to stabilize inflation expectations in order to achieve their desired inflation target. Yet, the empirical evidence documents that consumers and professional forecasters often have different views about the expected future inflation rate. Previous research demonstrates that greater newspaper coverage on inflation closes the gap between consumers' and professionals’ inflation forecasts. However, the literature only examines newspaper references to inflation, while more general references to the Fed have been overlooked. This paper fills this void, where we find some evidence that newspaper references to the Fed close the gap between consumer and professional inflation forecasts, although this effect varies by newspaper and by the way in which news coverage is measured.

Suggested Citation

  • Mazumder, Sandeep, 2021. "The reaction of inflation forecasts to news about the Fed," Economic Modelling, Elsevier, vol. 94(C), pages 256-264.
    • Handle: RePEc:eee:ecmode:v:94:y:2021:i:c:p:256-264
    DOI: 10.1016/j.econmod.2020.09.026
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Acharya, Viral & Crosignani, Matteo & Eisert, Tim & Eufinger, Christian, 2023. "How do supply shocks to inflation generalize? Evidence from the pandemic era in Europe," CEPR Discussion Papers 18530, C.E.P.R. Discussion Papers.
    2. Acharya, Viral & Crosignani, Matteo & Eisert, Tim & Eufinger, Christian, 2023. "How do supply shocks to inflation generalize? Evidence from the pandemic era in Europe," CEPR Discussion Papers 18530, C.E.P.R. Discussion Papers.
    3. Tetiana Yukhymenko, 2021. "Role of the Media in the Inflation Expectation Formation Process," IHEID Working Papers 13-2021, Economics Section, The Graduate Institute of International Studies.
    4. Chee-Hong Law & Kim Huat Goh, 2024. "A systematic literature review of the implications of media on inflation expectations," International Economics and Economic Policy, Springer, vol. 21(2), pages 311-340, May.
    5. Panpan Zhu & Qingjie Zhou & Yinpeng Zhang, 2024. "Investor attention and consumer price index inflation rate: Evidence from the United States," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
    6. Patrick Hirsch & Lars P. Feld & Ekkehard A. Köhler, 2023. "Breaking Monetary Policy News: The Role of Mass Media Coverage of ECB Announcements for Public Inflation Expectations," CESifo Working Paper Series 10285, CESifo.
    7. Yingying Xu & Zhixin Liu & Jingjing Chen & Sultan Salem, 2024. "How official TV news affect public inflation expectations? Evidence from the Chinese national broadcaster China Central Television," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 819-831, January.
    8. Aromi, J. Daniel & Clements, Adam, 2021. "Facial expressions and the business cycle," Economic Modelling, Elsevier, vol. 102(C).

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    More about this item

    Keywords

    Federal Reserve; Inflation expectations; Newspapers; Media;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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