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Strategic forecasting on the FOMC

  • Tillmann, Peter

The Federal Open Market Committee (FOMC) of the Federal Reserve consists of voting and non-voting members. Apart from deciding about interest rate policy, members individually formulate regular inflation forecasts. This paper uncovers systematic differences in individual inflation forecasts submitted by voting and non-voting members. Based on a data set with individual forecasts recently made available it is shown that non-voters systematically overpredict inflation relative to the consensus forecast if they favor tighter policy and underpredict inflation if they favor looser policy. These findings are consistent with non-voting member following strategic motives in forecasting, i.e. non-voting members use their forecast to influence policy.

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Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 27 (2011)
Issue (Month): 3 (September)
Pages: 547-553

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Handle: RePEc:eee:poleco:v:27:y:2011:i:3:p:547-553
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