The financial crisis and inflation expectations
Abstract: One measure of a successful monetary policy is its ability to anchor expectations about future inflation rates. Financial crises, such as that of 2008?09, can be considered natural experiments that test this anchoring. The effects of the crisis on inflation expectations were largely temporary in the United States, but longer-lasting in the United Kingdom. That is surprising because the United Kingdom had a formal inflation target during this period. Expectations may have been affected more because inflation stayed above the central bank?s target for extended periods following the crisis.
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Provider: Federal Reserve Bank of San Francisco
Part of Series: FRBSF Economic Letter
Publication Date: 2012
Order Number: 29