Once inflation expectations become unanchored in this way, it is very difficult and economically painful to lower them. While it is not surprising that inflation expectations for the next year are up, since current inflation is high, what I focus on is longer-term inflation expectations. Recent data that try to measure longer-term expectations are mixed.
Overall, my assessment is that longer-range inflation expectations have moved up from a level that was consistent with trend inflation below 2 percent to a level that’s consistent with underlying inflation a little above 2 percent.