
Finland paper advocates partial commitment to inflation targeting
A Bank of Finland discussion paper says there is a ‘real danger' of policy-makers fully committing to an inflation-targeting regime.
The author, George Waters, acknowledges using interest rates to counter movements in price levels – a lagged variable – can be an important tool. However, the author said, the degree to which policy-makers should commit to this approach depends on how expectations form and how accurately they are estimated.
There is the potential for "very poor outcomes" if the response is excessive, the author added. In a case where usual rule-based procedures do not apply, including when interest rates approach the zero lower bound, a short-run price level target is more appropriate to allow for an unanticipated shift in the way the public forms expectations.
Click here to read the paper.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.centralbanking.com/subscribe
You are currently unable to print this content. Please contact [email protected] to find out more.
You are currently unable to copy this content. Please contact [email protected] to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email [email protected]
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email [email protected]