Monetary policy helped curb inflation expectations – research

Higher rates could achieve a “soft landing” if the expectations channel is strong enough, authors say

The Bank for International Settlements, Basel
The Bank for International Settlements, Basel
Photo: Ulrich Roth

Monetary tightening by central banks has helped to curb inflation by reducing inflation expectations, research by the Bank for International Settlements finds.

Preventing inflation expectations from rising too high may avoid the need for a major growth slowdown, creating the possibility of a “soft landing”, the bulletin article says.

In the study, a team of BIS economists runs several model simulations for the US economy to assess alternative paths of monetary policy. They find that if the Federal

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