This paper aims to contribute to our understanding of inflation dynamics in the United Kingdom by estimating two …

inflation series is much higher than the underlying persistence across the range of disaggregated price series. Our results …

respond to movements in sectoral inflation rates. To do this we construct a Generalised Taylor model that takes specific … drive sectoral inflation rates as white noise processes, as in the UK data. We find that a policy rule that allows for … different responses to inflation in different sectors outperforms a rule which just targets aggregate CPI. However, the gain is …

the UK economy. We find that a 1 percentage point increase in the policy rate reduces output by up to 0.6% and inflation …