Evaluating changes in inflation expectations against deviations from the inflation target highlights the degree of expectation anchoring. A positive relationship indicates unanchored expectations, with the slope steepening post-2017 compared to the 2000–2017 period. Today’s post by Jurgens Fourie compares levels of expectations directly against inflation outcomes and finds a higher correlation, demonstrating that expectations are adaptive and responsive to realised inflation. This suggests that expectations remain heavily tied to current spot inflation rather than fully anchored to the target.
