Perceived Monetary Policy Rules: Evidence from Professional Forecasters in Australia

Jonathan Hambur and Qazi Haque

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: We study how professional forecasters perceive a central bank's reaction function and how those perceptions evolve over time, using survey evidence from Australia between 2015 and 2025. Adapting recent survey-based approaches, we recover time-varying perceived policy rules that map expected macroeconomic conditions into expected policy rates. We find that perceived responsiveness to inflation was modest prior to the pandemic, collapsed at the effective lower bound, and rose sharply only after sustained policy tightening began in 2022. Central bank communication about labour market conditions and financial stability shaped perceptions of the reaction function. However, during periods of elevated uncertainty--particularly following COVID--beliefs about the importance of inflation adjusted only after forecasters observed realised policy actions, highlighting the limits of guidance alone. We also show that heterogeneity in long-run beliefs, including views about long-run inflation, plays an important role in shaping interest rate expectations, but can be parsimoniously captured using forecaster fixed effects.

Keywords: perceived monetary policy rules; survey expectations; central bank communication; Reserve Bank of Australia (search for similar items in EconPapers)
JEL-codes: E43 E52 E58 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2026-02
New Economics Papers: this item is included in nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2026-09

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