Category: Uncategorized

Under one roof: housing and inflation expectations

Vedanta Dhamija, Ricardo Nunes and Roshni Tara

Inflation has been widely discussed in recent years, from supermarket aisles to newspapers. But what if what people think inflation is stems not only from grocery prices or energy bills, but from more? Our analysis in Dhamija et al (2026) shows house prices matter in this context, ie housing is salient. Using household surveys for the United States, we find that people tend to overweight their expectations about house prices when thinking about inflation with a coefficient of 25%–45%, significantly above the weight of house prices in the inflation index. Should central banks care about this? The short answer is yes.

Continue reading “Under one roof: housing and inflation expectations” →

What machines taking over pricing means for central banks

Anthony Savagar, Misa Tanaka and Jagdish Tripathy

With increased availability of big data and computing power, more firms are adopting algorithmic and AI-powered pricing to adjust prices rapidly in response to changing economic conditions over time and across consumers. This post reviews the existing research, draws implications for central banks, and identifies areas for further research on this topic. The research reviewed here was also used to inform Lombardelli and Patel (2026). The existing research suggests that new pricing technologies will lead to faster pass-through of shocks to prices, greater market segmentation, and may improve the inflation-output trade-off for monetary policy makers. To ensure price stability, central banks will need to monitor granular, high-frequency price data to gauge the impact of shocks on prices and inflation expectations.

Continue reading “What machines taking over pricing means for central banks” →

Temporary pause to Bank Underground

Given our need to reprioritise staff resources towards responding to the Covid-19 pandemic, we’ll be temporarily pausing publishing posts on Bank Underground. We will review this periodically and hope to resume soon.

Belinda Tracey, Managing Editor

If you want to get in touch, please email us at bankunderground@bankofengland.co.uk or leave a comment below.

Comments will only appear once approved by a moderator, and are only published where a full name is supplied. Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England, or its policy committees.