Exogenous influences on long-term inflation expectation deviations: Evidence from Chile

Carlos A. Medel ()

Central Bank Review, 2025, vol. 25, issue supplement

Abstract: This article examines the determinants of the anchoring of inflation expectations in Chile, both within and beyond the two-year policy horizon. Despite the heightened sensitivity of expectations to actual inflation developments following the recent inflation surge, evidence from linear and non-linear time-series models, as well as binary-outcome analyses, suggests that confidence in the Central Bank’s official inflation forecasts can persist, even in the presence of exogenous influences such as global and domestic economic policy uncertainty and geopolitical tensions. The findings indicate that, notwithstanding observed deviations from the inflation target, full confidence in the monetary policy stance can be maintained. Robustness checks confirm the baseline results when incorporating the full set of responses from the widely used inflation expectations survey. Nonetheless, financial market participants tend to anchor their expectations more firmly to the target, in contrast to experts and academics, who respond more strongly to new data. Members of the corporate sector appear to lie between these two groups in their expectations behaviour.

Keywords: Inflation; Inflation expectations; Expectations anchoring; Monetary policy; Chile (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.sciencedirect.com/science/article/pii/S1303070125000344 (application/pdf)

Related works:
Working Paper: Exogenous Influences on Long-term Inflation Expectation Deviations: Evidence from Chile (2025)
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:tcb:cebare:v:25:y:2025:i:supplement:article:100223

Access Statistics for this article

More articles in Central Bank Review from Research and Monetary Policy Department, Central Bank of the Republic of Turkey Contact information at EDIRC.
Bibliographic data for series maintained by () and () and () and ().