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Financial crisis, low inflation environment and short-term inflation expectations in Poland

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  • Tomasz Lyziak

    (Narodowy Bank Polski)

Abstract

To what extent the financial crisis, whose sharp phase began in 2008, and low inflation environment that started in 2013 have affected inflation expectations in Poland? Have inflation expectations of the private sector become more forward-looking? Is monetary policy still able to influence those expectations as compared with the pre-crisis period? These are the main questions addressed in this study. To answer them we analyse survey-based measures of inflation expectations of consumers, enterprises and financial sector analysts. Estimation of simple and extended hybrid models of inflation expectations combined with the verification of the orthogonality of expectational errors with respect to available information leads us to the conclusion that since 2008 the share of enterprises and financial sector analysts making improved use of available information and producing forward-looking forecasts has increased. Their expectations have become more sensitive to interest rate changes and developments in the real economy. However, at the same time enterprises’ inflation expectations have become less influenced by the NBP inflation target and more responsive to current inflation. The formation of consumer inflation expectations has not been affected significantly.

Suggested Citation

  • Tomasz Lyziak, 2016. "Financial crisis, low inflation environment and short-term inflation expectations in Poland," Bank i Kredyt, Narodowy Bank Polski, vol. 47(3), pages 285-300.
    • Handle: RePEc:nbp:nbpbik:v:47:y:2016:i:3:p:285-300
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    References listed on IDEAS

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    Cited by:

    1. Dzmitry Kruk, 2016. "SVAR Approach for Extracting Inflation Expectations Given Severe Monetary Shocks: Evidence from Belarus," BEROC Working Paper Series 39, Belarusian Economic Research and Outreach Center (BEROC).
    2. Tomasz Chmielewski & Mariusz Kapuściński & Andrzej Kocięcki & Tomasz Łyziak & Jan Przystupa & Ewa Stanisławska & Ewa Wróbel, 2018. "Monetary transmission mechanism in Poland. What do we know in 2017?," NBP Working Papers 286, Narodowy Bank Polski.
    3. Tomasz Chmielewski & Andrzej Kocięcki & Tomasz Łyziak & Jan Przystupa & Ewa Stanisławska & Małgorzata Walerych & Ewa Wróbel, 2020. "Monetary policy transmission mechanism in Poland What do we know in 2019?," NBP Working Papers 329, Narodowy Bank Polski.

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    More about this item

    Keywords

    inflation expectations; survey data; financial crisis;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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