  Monthly disaggregated US data from 1978 to 2016 reveals that exposure to news
on inflation and monetary policy helps to explain inflation expectations. This
remains true when controlling for household personal characteristics,
perceptions of government policy effectiveness, future interest rates and
unemployment expectations, and sentiment. We find an asymmetric impact of news
on inflation and monetary policy after 1983, with news on rising inflation and
easier monetary policy having a stronger effect in comparison to news on
lowering inflation and tightening monetary policy. Our results indicate the
impact on inflation expectations of monetary policy news manifested through
consumer sentiment during the lower bound period.
