The (Re)Anchoring of US Firms' Inflation Expectations

This Economic Commentary studies the degree of anchoring of US firms' inflation expectations from 2018 to 2025 by leveraging a novel survey of firms' medium-term inflation expectations and their subjective perceptions of the Federal Open Market Committee's (FOMC) inflation objective. We capture unanchoring by measuring disagreement across firms' expectations and the misalignment between the mean of firms' expectations and the FOMC's inflation objective. Based on our measure, the anchoring of firms' medium-term inflation expectations weakened significantly during the pandemic inflation surge, driven largely by an increase in disagreement but also by firms' subjective perceptions of the FOMC's inflation objective's temporarily deviating from 2 percent. While we find anchoring has significantly strengthened since 2022, it remained somewhat weaker during 2025 than the prepandemic average.