Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311106 
Year of Publication: 
2024
Series/Report no.: 
ECB Working Paper No. 2957
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
We document novel survey-based facts about preferred long-run inflation rates among US consumers. Consumers on average prefer a 0.20% annual inflation rate, well below the Federal Reserve's 2% target. Inflation preferences not only correlate with demographic and socioeconomic characteristics, but also with economic reasoning. A randomized control trial reveals that two narratives based on economic models-describing how inflation lowers the real value of wages and money holdings-affect inflation preferences. While our results can inform the design of central bank communication on inflation targets, they also raise questions about the alignment between such targets and consumer preferences.
Subjects: 
Household expectations
Survey
Inflation preferences
JEL: 
C83
E31
E52
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-6767-9
Document Type: 
Working Paper

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