Elisabeth Falck, Mathias Hoffmann, Patrick Hürtgen, (2017), ” How disagreement in inflation expectations can influence the transmission of monetary policy”, VoxEU, 6 November
Existing theoretical and empirical evidence suggests that less expansionary monetary policies lead to lower inflation and dampened inflation expectations. This column considers how the dispersion of inflation expectations can affect this relationship. The results show that an increase in the policy rate can give rise to higher inflation in the short run if professional inflation forecasts differ widely. These findings highlight the importance of considering the amount of agreement about inflation expectations in monetary policy decision-making.
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- Nocera, Andrea, Roma, Moreno, (2017), «House prices and monetary policy in the euro area: evidence from structural VARs», ECB, June
- Andersson, Fredrik, Jonung, Lars, (2017), «Inflation targets and the benefits of an explicit tolerance band», Vox Eu, 8 May