In monetary policymaking, central bankers have long pointed out the importance of measuring the expectations of financial market participants, households, and firms – especially with regard to inflation and the central bank’s so-called “reaction function” to changes in the economic outlook. For example, measuring market participants’ expectations for the policy rate path sheds light on both the central bank’s effectiveness in communicating its policy intentions and the transmission of anticipated future monetary policy actions into financial conditions. Inflation expectations of households, firms, and other economic agents influence a variety of decisions, including those related to consumption, saving, investment, and the setting of prices and wages, as well as the determination of the real interest rates that influence these decisions. The aggregation of these choices in turn determines realized inflation in equilibrium. Thus, inflation expectations are a crucial determinant of actual inflation and, as such, need to be carefully monitored. Further, the effectiveness of monetary policy and central bank communication relies on longer-run inflation expectations being wellanchored, making their reliable measurement very important for policymakers. More generally, expectations by consumers and businesses about a number of household, firmlevel, and economy-wide outcomes are increasingly useful inputs into a variety of forecasting and “now-casting” models. In addition to tracking measures of expectations implied by asset prices, central banks today rely increasingly on survey-based measures of subjective expectations. At the New York Fed, we conduct a diverse set of surveys to measure policy-relevant expectations.

The three repeating supplements cover credit access, job search and retirement, and spending. Topics addressed so far in the “floating” supplement include the Affordable Care Act, savings from lower gas prices, student loans, family leave, and use of insurance products. Together, the core monthly module and the monthly supplement take about fifteen minutes. 4  BIS central bankers’ speeches  quarter on various topics. These are up to thirty minutes in length and are separate from the monthly survey.14 Before giving more details about the SCE questions and some background on the research underpinning them, I would like to briefly point out two other important design elements of the SCE. First, responses are collected using an online survey tool. While it has become harder to obtain nationally representative samples with telephone and mail surveys, for which response rates have been falling, the opposite has been true for online surveys. Moreover, some evidence suggests that respondents are more likely to answer financial questions posed in online surveys. In a recent randomized survey experiment conducted by colleagues at the New York Fed and the Dutch central bank,15 the share of respondents reporting their inflation expectations in online interviews slightly exceeded the share reporting their expectations in face-to-face interviews. In addition to being more cost effective, online surveys, when fielded at high frequency, provide important flexibility by allowing questions to be added or changed at short notice.