Disagreement in Consumer Inflation Expectations

Qualitative survey data on inflation expectations can be quantified with the use of probability or regression methods. This paper presents the results of probability methods implemented to estimate numerical measures of Polish consumer inflation expectations. Inflation expectations constitute a subject of particular interest to central banks, especially those pursuing a monetary policy based on a strategy of inflation targeting. One of commonly emphasised features of this strategy is that it has proved to be useful in anchoring inflation expectations. The paper proposes a manner in which the achievement of this goal may be assessed ex-post. It is argued that to make such an assessment it is not sufficient to examine changes in the level of inflation expectations relative to inflation target, but it is necessary to analyse in detail the formation of inflation expectations, in particular the degree to which requirements of rational expectations hypothesis, namely: unbiasedness and macroeconomic efficency, are fulfilled. The examination of consumer expectations in Poland leads to the conclusion that even if the adoption of inflation targeting in Poland in 1998 and the commitment of monetary authorities to reach price stability reflected in a fast disinflation process decreased the level of inflation expectations, it has not sufficiently increased their rationality yet. On the other hand, there appear some signs of consumer inflation expectations in Poland becoming slightly more forwardlooking in the most recent period.