Inflation Expectations and Monetary Policy

Emerging market central banks have come to rely on an increasing number of measures of inflation expectations from a variety of sources. We highlight some of the empirical limitations of the various measures, and argue that different measures are likely to be best suited for different purposes. We discuss what drives inflation expectations based on central bank survey responses, and provide evidence that inflation expectations in emerging market economies have become more strongly anchored over time. Full Publication: Inflation Mechanisms, Expectations and Monetary Policy