1. The Federal Reserve are particularly interested in the inflation expectation because they use it as a monetary indicator. Economists are able to predict the inflation rate and depending on the result, along with other indicators, the Feds will adjust their monetary policies. Workers, lenders, savors, pensioners, businesses and interest rate- sensitive industries such as mortgage companies may also be interested as there could be a change in inflation.
Workers would be affected by inflation as their incomes do not shift with inflation immediately. This means that if the inflation increased, a worker's income would not be able to buy as much as his salary has not been adjusted to inflation.
Lenders would be interested in inflation as the interest they collect will not be worth as much as before.
Savors would feel that the dollars they saved today will not be worth the same in the future.
Pensioners would be affected if their savings do not increase as rapidly as prices do because they are living on a fixed income.
Businesses will not invest as they cannot plan for the future if inflation fluctuates.
2. Economists are able to predict the inflation expectation by looking at long-term bond yields and how investors are pricing inflation indexed bonds. Alternatively, consumer confidence can be measured by surveys such as the Reuters/ University of Michigan consumer sentiment index.
3. According to the Financial Times, "Short View: Inflation expectations", by John Authers; published on March 23rd 2010; http://www.ft.com/cms/s/0/b1d8d96a-36a6-11df-b810-00144feabdc0.html; they currently expect 2.2% inflation using the Financial Times, 10 year breakeven rates. The inflation expectations for 2009 was 0.9% and in 2008 was 2.3%.
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