Inflation expectations in Hungary

The aim of this study is to provide an overview of the main characteristics of expectations of professional forecasters, households and firms in respect of Hungarian inflation trends. In countries where an inflation targeting regime is in place, inflation expectations are of key importance from the perspective of monetary policy and play a significant role in central bank decisionmaking and follow-up communication. The inflation expectations of economic agents are relevant for central banks for two main reasons. On the one hand, inflation expectations can provide direct information concerning the credibility of monetary policy. On the other hand, they may carry important information that can help central banks in forecasting macroeconomic developments. For the purpose of understanding and forecasting inflation developments, most central banks monitor the expectations of individual economic agents on a regular basis. Besides average expectations, the dispersion of inflation expecta tions may also contain significant information for central banks. For Hungary, inflation expectation data are available from surveys based on quantitative or qualitative questionnaires for households, firms and professional forecasters.