For the industrialized economies, our evidence
indicates that IT has played a significant role in
anchoring long-run inflation expectations. For the
United States and the euro area, private-sector inflation
forecasts (at horizons up to ten years) exhibit a
highly significant correlation with a three-year moving
average of lagged inflation.3 In contrast, at the
longest horizons this correlation is largely absent
for the five IT countries, indicating that these countries’
central banks have been quite successful in
delinking expectations from realized inflation