Euro area inflation expectations linked to current prices and unemployment rates.
The article examines inflation expectations in the Euro area by analyzing market-based data from inflation-linked swaps. The researchers used a model to separate inflation expectations from inflation risk premium at different time horizons. They then identified key factors influencing inflation expectations, such as current inflation levels, unemployment rates, and the Euro exchange rate. These factors play a significant role in shaping how people anticipate future inflation in the Euro area.