Governments’ party identifications can indicate the types of economic
policies they are likely to pursue. A common rule of thumb is that
left-party governments are expected to pursue policies for lower
unemployment, but which may cause inflation. Right-party governments are
expected to pursue lower inflation policies. How do these expectations shape
the inflation forecasts of monetary policy bureaucrats? If there is a
mismatch between the policies, bureaucrats expect
governments to implement, and those that they actually do,
forecasts will be systematically biased. Using US Federal Reserve Staff’s
forecasts we test for executive partisan biases. We find that irrespective
of actual policy and economic conditions forecasters systematically
overestimate future inflation during left-party presidencies and
underestimate future inflation during right-party ones. Our findings suggest
that partisan heuristics play an important part in monetary policy
bureaucrats’ inflation expectations.