How forward looking are central banks? Some evidence from their forecasts

Michal Brzoza-Brzezina, Jacek Kotłowski and Agata Miśkowiec
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Agata Miśkowiec: Warsaw School of Economics, https://sgh.waw.pl

No 112, NBP Working Papers from Narodowy Bank Polski

Abstract: We estimate forward-looking Taylor rules on data from macroeconomic forecasts of three central banks (Bank of England, National Bank of Poland and Swiss National Bank) in order to determine the extent to which these banks are forward looking in their monetary policy decisions. We find that all three banks are to some extent forward-looking, however to a varying degree. With respect to inflation, the NBP and the SNB look far into the future, while the BoE seems to concentrate on current inflation. As to output, the BoE and the SNB take into account its future or current value while for the NBP this variable is insignificant. We also find that central banks prefer to concentrate on one particular horizon rather than take into account the whole forecast.

Keywords: Taylor rule; forward-looking monetary policy; feedback horizon (search for similar items in EconPapers)
JEL-codes: C25 E52 E58 (search for similar items in EconPapers)
Pages: 30
Date: 2012
New Economics Papers: this item is included in nep-cba, nep-for, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:nbp:nbpmis:112

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