Households’ subjective expectations: Disagreement, common drivers, and reaction to aggregate shocks

Servicii bancare

Understanding how households interpret macroeconomic policy is vital to the effectiveness of central banks. This column demonstrates that the reactions of individual households frequently contradict standard theoretical playbooks. Using euro area survey data, the authors find that households interpret policy through a lens shaped by recent crises – such as the energy shock following Russia’s invasion of Ukraine – as well as deep-rooted concerns about real purchasing power. Addressing these