Thank you, Michael, and thank you to ESMT for the invitation. It is a pleasure to be here for this inauguration and to speak about a topic to which Michael has made an outstanding contribution: how households form expectations and why those expectations matter for monetary policy.

Monetary policy is, by its nature, forward-looking. We track inflation, wages, consumption, credit and financial conditions. But none of these data fully tell us what households believe and how these beliefs feed into their economic and financial decisions, how uncertain they are, or why similar shocks produce different responses across population sub-groups and countries.

The insights from expectations surveys matter, because expectations about the future…