Inflation targets and the benefits of an explicit tolerance band

Forskningsoutput: Övriga bidragWebbpublicering/bloggpost

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Inflation targets and the benefits of an explicit tolerance band. / Andersson, Fredrik N G; Jonung, Lars.

voxeu.org. 2017Article.

Forskningsoutput: Övriga bidragWebbpublicering/bloggpost

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TY - GEN

T1 - Inflation targets and the benefits of an explicit tolerance band

AU - Andersson, Fredrik N G

AU - Jonung, Lars

PY - 2017/5/8

Y1 - 2017/5/8

N2 - Inflation-targeting central banks commonly fail to hit their official inflation targets, so targets are combined with a tolerance band which is either implicit or explicit. Taking the Swedish Riksbank as an example, this column argues that adopting an explicit tolerance band would better communicate to the public the central bank’s lack of full control over the rate of inflation and thus foster public confidence in monetary policy, and it would also increase the central bank’s ability to stabilise the economy. The width of the band can be derived from the historical inflation outcome.

AB - Inflation-targeting central banks commonly fail to hit their official inflation targets, so targets are combined with a tolerance band which is either implicit or explicit. Taking the Swedish Riksbank as an example, this column argues that adopting an explicit tolerance band would better communicate to the public the central bank’s lack of full control over the rate of inflation and thus foster public confidence in monetary policy, and it would also increase the central bank’s ability to stabilise the economy. The width of the band can be derived from the historical inflation outcome.

KW - central banks

KW - inflation

KW - inflation targeting

KW - monetary policy

KW - EU

KW - eurozone

KW - price stability

M3 - Web publication/Blog post

PB - voxeu.org

ER -