Rise in households' inflation expectations impacts their savings in bank term deposits: RBI paper

The authors said that similar to India, inflation expectations are biased and not efficient in other countries too, like the US, England, Japan, New Zealand, South Africa, Czech Republic, Philippines and Russia.

New Delhi: When sentiments about future inflation are on the higher side, households change their savings portfolio with respect to bank deposits, according to a working paper released by the Reserve Bank of India (RBI) on Tuesday.

Inflation expectations play a vital role in regulating households' consumption behaviour and consequent savings, said the paper titled 'Taking Cognisance of Households' Inflation Expectations in India'.

The paper is authored by Devendra Pratap Singh, Aditya Mishra and Purnima Shaw of the RBI. The findings of the paper are of the authors and not that of the RBI.