Heterogeneity in Household Inflation Expectations: Policy Implications

We empirically characterize the heterogeneity in the conditional distribution of household ination expectations across demographic groups using the Survey of Consumer Expectations and investigate how monetary policy shocks aect the conditional distribution.We nd that across all demographic groups, the peak of the group-specic distribution of household ination expectations aligns closely with the Federal Reserve's 2 percent target.However, we also nd substantial heterogeneity both within and across groups, primarily on the right end of the distribution.Nevertheless, we show that a contractionary monetary policy shock identied by high-frequency nancial market response reduces ination expectations of households more vulnerable to the risk of unanchoring.