India, Sept. 13 -- Central banks should give less weight to inflation expectations reported by consumers and companies and focus more on financialmarket expectations when setting policy, as expectations matter only when they translate into actual economic behaviour, UBS Chief Economist Paul Donovan said in a report.
Donovan said inflation expectations have become more extreme and less grounded in reality in the social media era, making survey-based measures less useful unless they lead people, businesses or investors to change their actions. "Expectations without the power or will to act on those expectations are largely irrelevant," he said.
The report said consumer expectations can influence inflation if workers have enough bargaining p...