Forward guidance does not influence inflation expectations: discuss
klementoninvesting.substack.com
Forward guidance by central banks has become the main policy tool to influence inflation expectations of investors, businesses and households. Many economists think that central bankers are doing an excellent job with their forward guidance since inflation expectations as measured by the inflation expectation of households in the University of Michigan Consumer Survey of breakeven inflation rates of government bonds are incredibly stable. The levels may be different as the chart below shows, but since the adoption of forward guidance by the Federal Reserve in the early 2000s, inflation expectations have become increasingly stable – especially after the financial crisis of 2008 when forward guidance and quantitative easing became the two dominant tools for monetary policy.
Forward guidance does not influence inflation expectations: discuss
Forward guidance does not influence inflation…
Forward guidance does not influence inflation expectations: discuss
Forward guidance by central banks has become the main policy tool to influence inflation expectations of investors, businesses and households. Many economists think that central bankers are doing an excellent job with their forward guidance since inflation expectations as measured by the inflation expectation of households in the University of Michigan Consumer Survey of breakeven inflation rates of government bonds are incredibly stable. The levels may be different as the chart below shows, but since the adoption of forward guidance by the Federal Reserve in the early 2000s, inflation expectations have become increasingly stable – especially after the financial crisis of 2008 when forward guidance and quantitative easing became the two dominant tools for monetary policy.