This paper examines data from the European Central Bank's Consumer Expectations Survey, which gathers information on household expectations about a wide range of macroeconomic and individual-level variables. The analysis of the determinants of business cycle expectations, which relies on the correlation between expected prices and quantities to identify supply and demand factors, contributes to the information available to economic policymakers.
The results show that, following the invasion of Ukraine, perceived supply factors dominated household expectations. The contractionary monetary policy of the last two years has had a negative effect on economic growth expectations, whereas its effects on inflation expectations have been mixed.
