Can we rely on market-based inflation forecasts?

Michael Bauer and Erin McCarthy

FRBSF Economic Letter, 2015

Abstract: A substantial decline in market-based measures of inflation expectations has raised concerns about low future inflation. An important question to address is whether the forecasts based on market information are as accurate as alternative forecasting methods. Compared against surveys of professional forecasters and other simple constant measurement tools, market-based inflation expectations are poor predictors of future inflation. This suggests that these measures contain little forward-looking information about future inflation.

Keywords: Inflation targeting; Inflation (Finance) (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (9)

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