It’ll be no surprise to any one still breathing that inflation expectations dropped over 19% in one moth from October to November. From the Melbourne Institute:
The median expected inflation rate, reported in the Melbourne Institute Survey of Consumer Inflationary Expectations, fell to 2.5 in November from 3.1 per cent in October.
According to Dr. Michael Chua, a Research Fellow at the Melbourne Institute, “The lower inflationary expectation likely reflects the lower than expected inflation rate for the September quarter and the announced rate cut decision on 1 November 2011. In this month’s survey, the proportion of respondents expecting inflation to fall within the Reserve Bank’s target band of 2 to 3 per cent increased to 19.8 per cent from 15.3 per cent in October.”
Still, only one in five expect inflation within the band. That may have something to do with the following long term chart of inflation expectations:
Let’s face it, the Macfarlane era at the RBA was an inflation management failure. The challenges facing the Stevens RBA were much higher and they’ve done far better. But we seem to be left with a deep skepticism about inflation containment.
