Inflation Targeting and Communication: Should the Public Read Inflation Reports or Tea Leaves?
AbstractInflation-targeting central banks have a respectable track record at explaining their policy actions and corresponding inflation outturns. Using a simple forward-looking policy rule and an assessment of inflation reports, we provide a new methodology for the empirical evaluation of consistency in central bank communication. We find that the three communication toolsâ€”inflation targets, inflation forecasts, and verbal assessments of inflation factors contained in quarterly inflation reportsâ€”provided a consistent message in five out of six observations in our 2000â€“05 sample of Chile, the Czech Republic, Hungary, Poland, Thailand, and Sweden.
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Bibliographic InfoPaper provided by Czech National Bank, Research Department in its series Working Papers with number 2007/14.
Date of creation: Dec 2007
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Emerging markets; forecasting; inflation targeting; monetary policy; transparency.;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
- E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-06 (All new papers)
- NEP-CBA-2008-08-06 (Central Banking)
- NEP-FOR-2008-08-06 (Forecasting)
- NEP-MAC-2008-08-06 (Macroeconomics)
- NEP-MON-2008-08-06 (Monetary Economics)
- NEP-SEA-2008-08-06 (South East Asia)
- NEP-TRA-2008-08-06 (Transition Economics)
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- Katerina Smidkova & Aleš Bulíø, 2008. "Hits and Misses: Ten Years of Czech Inflation Targeting (Introduction)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 58(09-10), pages 398-405, December.
- Juraj Antal & Michal Hlavacek & Tomas Holub, 2008. "Basic Characteristics of Inflation Targeting in the Czech Republic," Occasional Publications - Chapters in Edited Volumes, in: Katerina Smidkova (ed.), Evaluation of the Fulfilment of the CNB's Inflation Targets 1998-2007, chapter 2, pages 18-34 Czech National Bank, Research Department.
- Jiri Bohm & Petr Kral & Branislav Saxa, 2009. "Perception is Always Right: The CNBâ€™s Monetary Policy in the Media," Working Papers 2009/10, Czech National Bank, Research Department.
- Jan Filáček & Branislav Saxa, 2012. "Central Bank Forecasts as a Coordination Device: Evidence from the Czech Republic," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 6(3), pages 244-264, October.
- Katerina Smidkova, 2008. "Evaluation of the Fulfilment of the CNB's Inflation Targets," Occasional Publications - Chapters in Edited Volumes, in: Katerina Smidkova (ed.), Evaluation of the Fulfilment of the CNB's Inflation Targets 1998-2007, chapter 1, pages 10-17 Czech National Bank, Research Department.
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