Anchoring household inflation expectations: experimental evidence from Japan

Based on a survey including an information provision experiment, this paper attempts to answer the following three questions: (1) Are Japanese households' long-term inflation expectations anchored? (2) Does the provision of information on inflation targeting (IT) policy cause long-term inflation expectations to converge to 2%? (3) Does the above convergence stimulate households' planned spending? Our findings are as follows. First, households’ long-term inflation expectations are not anchored. Second, the provision of information on IT brings long-term inflation expectations closer to 2%, but the extent is limited. Third, although household planned spending is stimulated by the provision of information on IT, this does not seem to be caused by long-term inflation expectations approaching 2%. We will discuss a possible factor that stimulated household planned spending.