Abrupt monetary policy change and unanchoring of inflation expectations

Marco Bonomo, Carlos Carvalho, Stefano Eusepi, Marina Perrupato, Daniel Abib, Joao Ayres and Silvia Matos

Journal of Monetary Economics, 2024, vol. 145, issue S

Abstract: Inflation expectations can quickly become unanchored if the central bank undermines its commitment to the inflation target. This paper exploits an abrupt change in monetary policy by the Brazilian Central Bank in 2011 and microdata from a daily survey of professional forecasters to establish support for this claim. Reanchoring came only years later, after a regime shift that included a change of government. A simple model with a well-defined concept of (un)anchored inflation expectations provides a coherent explanation and structural interpretation of our empirical findings.

Keywords: Inflation expectations; Monetary policy; Anchored expectations; Unanchored expectations; Monetary policy shifts; Brazil (search for similar items in EconPapers)
JEL-codes: E53 E65 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:145:y:2024:i:s:s0304393224000291

DOI: 10.1016/j.jmoneco.2024.103576

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