The interest rate conditioning assumption

Charles Goodhart

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: A central bank’s forecast must contain some assumption about the likely future path for its own policy-determined short-term interest rate. Most of those central banks who have publicly reported their procedures in this respect have assumed that interest rates would remain unchanged from their present level, e.g. in Sweden, in the USA (at least most of the time) (see, for Sweden, Berg, Jansson and Vredin, 2004; and Jansson and Vredin, 2003; and for the USA, Boivin, 2004; Reifschneider, Stockton and Wilcox, 1997; and Romer and Romer, 2004). The UK was amongst this group from the first Inflation Report, at the end of 1992, until May 2004; then in August 2004 it shifted to the use of the forward short rates that are implied by the money market yield curve.

JEL-codes: G21 G28 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2015-08-17
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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