Second, inflation expectations are of interest to policymakers independent of inflation itself. A considerable literature suggests that successful monetary policies should stabilize, or “anchor,” inflation expectations so as to prevent them from becoming a source of instability in their own right (Goodfriend, 1993; Evans and Honkapohja, 2003).
Finally, knowledge of the expectations of inflation in financial markets permits the calculation of real interest rates, which are important indicators of both the condition of the economy and the stance of monetary policy.