FOMC inflation forecasts reduce variation in private inflation expectations.
The article explores how the release of inflation forecasts by the Federal Open Market Committee impacts private inflation expectations. The researchers found that when the FOMC publishes its inflation forecasts, it reduces the differences in private inflation predictions for the current year. This effect was consistent across different data sets and economic factors. Interestingly, the differences in views among FOMC members did not influence the dispersion of private inflation forecasts.