The Change in Inflation Expectation During and Post the Pandemic in European Region

Abstract

What people anticipate inflation to be in the future is known as inflation expectations. These future inflation expectations are significant because they have an impact on people's actions now, which in turn has an impact on inflation in the future. It is crucial to get the inflation expectation as close to the central bank's target as possible because doing so makes it easier for the bank to achieve its goal of inflation. This study tries to explore the inflation expectations in the European region and how they change during the pandemic and post-pandemic periods. The paper also offers a future prediction regarding the inflation expectation. In order to forecast the level of expected future inflation, the study conducts a comparative analysis including the GDP, unemployment rate, and consumer price index. In the end, it was discovered that future inflation expectations are typically less firmly anchored and higher than the central bank's target. The study's conclusion also suggests a possible way to make the expectation more certain.