Definition
What people, businesses and investors think inflation will be in the future.
The story
They're measured two main ways: surveys, like the University of Michigan's questions on expected inflation over the next year and the next 5 to 10 years, and market prices, like breakeven inflation from Treasury bonds. The Fed watches them closely, because if people expect prices to keep rising, they act in ways that can make it happen.
Why markets watch it
If expectations drift up, the Fed may feel it has to keep rates higher for longer.
Connects to
Breakeven inflationConsumer sentimentInflationThe Federal Reserve
Last seen in
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms