Great Recession Impact: Rising Inflation Expectations Spark Economic Uncertainty
Short-term inflation expectations dropped during the great recession but have since rebounded, especially in advanced economies. Long-term inflation expectations have remained relatively stable, indicating continued central bank credibility. However, there is higher uncertainty about long-term inflation expectations post-crisis. Rising commodity prices and economic recovery affect inflation expectations, impacting spending decisions and price setting. The credibility of central banks' commitment to price stability has not significantly suffered due to the recession and policy measures.