Targeted Taylor rules: monetary policy responses to demand- and supply-driven inflation

Boris Hofmann, Cristina Manea and Benoit Mojon

BIS Quarterly Review, 2024

Abstract: This feature documents that central banks operating under inflation targeting or similar regimes have in practice pursued their objectives in a targeted manner in the sense that they have reacted more forcefully to demand-driven than to supply-driven inflation. This new finding comes from the estimation of Taylor-type monetary policy rules for seven major advanced economies. The estimated targeted response aligns with both monetary theory prescriptions and central banks' doctrine as reflected in their official statements. Our analysis further suggests that during the post-pandemic inflation surge, policy rates were initially slow to respond but eventually caught up with the levels predicted by the targeted Taylor rules.

JEL-codes: E12 E3 E52 (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)

Downloads: (external link)
http://www.bis.org/publ/qtrpdf/r_qt2412d.pdf (application/pdf)
http://www.bis.org/publ/qtrpdf/r_qt2412d.htm (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:bisqtr:2412d

Access Statistics for this article

BIS Quarterly Review is currently edited by Christian Upper

More articles in BIS Quarterly Review from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().