Monetary Policy Communication and Household Inflation Expectation Heterogeneity: A Cross-Country Empirical Study Based on Micro Survey Data

Abstract

This paper investigates the influence of monetary policy communication on the formation of household inflation expectations, examining how this influence varies across households with different income levels, educational backgrounds, and degrees of attention to economic information. Using multinational microsurvey data covering multiple countries, which include household inflation expectations, knowledge of central banks, information sources, and socioeconomic characteristics, we find that monetary policy communication plays a significant role in shaping household inflation expectations. However, the magnitude and accuracy of this effect differ markedly among various household groups. Households with higher income and education levels, as well as those who actively follow economic news, demonstrate greater sensitivity to central bank communications and exhibit less bias in their inflation expectations. In contrast, households with lower income or education levels often struggle to accurately interpret policy signals due to limited access to relevant information, leading to systematically higher expectations. These findings provide empirical support for central banks to design targeted communication strategies that consider the diverse informational needs and responsiveness of different household groups.