Overall, these surveys suggest that market participants do expect relatively low inflation to continue in most major industrial and emerging-market countries. In the industrial countries and a few Asian emerging-market economies, for example, long-term inflation expectations dropped below 5 percent a decade or more ago and are currently around 2 percent to 3 percent.
One inference, therefore, is that inflation in future is unlikely to go up if inflation expectations do not go up. In India, we have the opposite problem: elevated current and expected inflation constrains the Reserve Bank in substantially easing monetary policy. This suggests that central banks, assign a significant weight to inflation expectations in their monetary policy assessment.