Monetary Policy Announcements and Household Expectations of the Future

This paper studies how U.S. households adjust their expectations after Federal Reserve announcements from 2013 to 2021. Using microdata from the Survey of Consumer Expectations, we find short-term revisions in inflation, interest rate, and home price forecasts. Inaction by the Fed signals dovishness and lowers expectations for future rate hikes. Tightening, by contrast, dampens home price growth expectations. Other domains, like income and spending, show little movement. Information frictions play a central role: effects weaken at longer horizons and adjust slowly over time. The results highlight the limits of monetary policy communication when attention and interpretation vary.