U.S. inflation expectations do not appear well anchored among businesses and consumers, and Federal Reserve policymakers must remain attuned to this risk as they weigh the path of monetary policy, San Francisco Fed visiting scholar Yuriy Gorodnichenko said Friday.
"Inflation expectations look very unanchored to us," he said at the second annual Thomas Laubach Research Conference at the Fed's board of governors.
Fed officials have recently acknowledged a spike in short-run inflation expectations but remain sanguine about longer-run expectations being anchored. But that's not enough grounds for comfort, said Gorodnichenko, a professor at the University of California, Berkeley.
"Long-term expectations are much less important than short-term expectations and explaining what we see in the data," he said. (See: MNI INTERVIEW: Fed On Hold Until At Least December - Lacker)