to positively correlated expectations about these two components. We develop a model with imperfect information that …

Policymakers often cite the risk that inflation expectations might "de-anchor" as a key reason for responding …-run inflation expectations. In our framework, households and firms are imperfectly informed about the central bank's objective and … adverse supply shocks and accepts short-run output costs to secure more stable inflation expectations. The strength of this …

that households respond to higher expected inflation by reducing consumption. Household inflation expectations also emerge …