what are the sources of the divergence in inflation expectations between financial markets and households? iii. firms ’ inflation expectations are also of primary interest for central banks while this conference is mostly about households ’ expectations, i would like to stress that monitoring firms ’ inflation expectation is also of primary interest from a monetary policy perspective. compared to households, information on inflation expectations within firms is even scarcer. this scarcity of information is in sharp contrast with the relevance of such information for the conduct of monetary policy : at the end, firms are the price setters in the economy and also take part in the wage setting process. besides, there is evidence that their expectations affect their economic decisions like employment or investment. one of the most comprehensive evidence has been produced for new zealand ’ s firms, showing that inflation expectations among business leaders are not so different from household expectations. in europe, banca d ’ italia has also developed a very rich and informative firms ’ expectations survey since 1999. the bundesbank has also conducted a very interesting survey asking tradeunions and employers what was the relevant inflation underlying the last collective wage agreement. comparative information on such issues across the euro area would be very useful. i am convinced that more analysis on firms ’ expectations would produce very valuable and relevant information for our monetary policy. conclusion let me now conclude by saying that we need to better measure consumer and firm inflation expectations. this lack of information prevents our communication policies from being fully efficient. one important question for monetary policy is what kind of communication tools can be used to better communicate with the general public and influence their inflation expectations. this conference is a unique opportunity to benefit from the analyses of the most distinguished experts on the various exciting issues that are related to household expectations. i wish you very fruitful discussions. thank you for your attention. figure 1. long term inflation expectations for the euro area source : bis report “ recent developments in the global economy ” ( august 2019 ) - figure 2. households perceive quite well the overall evolution of inflation source : b. coeure ( 2019 ). inflation expectations and the conduct of monetary policy, speech at an event organised by the safe policy center, 11 july 2019 figure 3. recent divergence between the evolution of household inflation expectations and market based - measures sources : ecb, european commission

: first, related to the liquidity of financial markets, and second because they are affected by the evolution of the risk premium over time. moreover, while financial market expectations provide information on future financing conditions, the evolution of prices and wages depends more deeply and directly on what household and firms expect regarding future growth and inflation. consequently, existing surveys among firms and households can provide very useful and valuable information on expectations. better monitoring the general public's inflation expectations is not an easy task since inflation expectations of firms or consumers are not directly observable. for the moment, reliable data on consumers or firms ’ inflation expectations are quite scarce in the euro area whereas in other jurisdictions expectation surveys have been developed quite extensively – famous and recent examples include the new york fed survey, the tankan survey in japan or the different surveys developed by the bank of england. in this respect, the new bundesbank household survey contributes to fill the gap and it is also an excellent example of the recent efforts made by central banks to collect new and better information on expectations of economic agents. ii. communication of central banks should also target households for the moment, our most reliable information on the general public ’ s inflation expectations in the euro area comes from the consumer survey conducted by the european commission. when comparing the different sources of inflation expectations with consumer survey expectations, we can see that they deliver a very different message on the level of inflation expectations, compared to financial markets. european households perceive an inflation rate close to 10 % whereas their inflation expectations are closer to 5 %. one implication of such a result is that we need to improve a lot our communication to a more general audience. another conclusion we can draw is that, if households are not well aware of the level of inflation, they perceive quite well the overall evolution of inflation over time ( figure 2 ). as already pointed out by benoit coeure 1, while households are not professional forecasters, their inflation expectations usually correlate very well with the ones anticipated by professional forecasters for the same forecast horizon ( one year ) ( figure 3 ). however, we can see over the recent period, a divergence between consumer expectations and financial markets indicators. b. coeure ( 2019 ). inflation expectations and the conduct of monetary policy, speech at an event organised by the safe policy center, 11 july 2019 since it could strongly affect the future path of inflation, such a pattern raises several important questions : will this divergence persist over time or is it very temporary?