Consumer inflation expectations: Are they shaped by central bank messages and personality traits? An experimental study of European economies

This experimental study investigates 397 young adults across five European economies with the aim of identifying the effects of central bank (CB) communication and expert opinions. Additionally, we explore the relationships between personality traits and expectations. Statistical methods and two models designed for ordinal variables, i.e., the multinomial logit model and the ordinal logit regression, are applied to the experimental dataset, and the estimation procedures used in this context include Bayesian averaging modelling. The results provide no evidence to support the effect of the CB’s post-decision sentiment. The distributions of the expectations do not differ significantly among the experimental groups and the control group. However, the findings indicate strong support for the authority effect; namely, the forecasts were revised after the expert comment. We also identify a very limited effect of personality traits on forecast revision but not on expectations. This study provides the first insights into the personality traits relevant to the formation of expectations among young consumers. Its novelty also pertains to the way in which CB communication is considered: CB announcements were kept as close as possible to the actual post-decision releases of CBs, which is not the case in other works on this topic.