satisfy a new central bank mandate specifying greater emphasis on inflation stabilisation. In this case, our results show that … inflation may fall dramatically before it gradually rises to its new long run level. The potential for inflation to undershoot …

In this paper we incorporate the term structure of interest rates into a standard inflation forecast targeting … analyse inflation forecast targeting in two environments. One in which the central bank has perfect knowledge, in the sense …

, in the sense that it understands and observes the process by which private sector inflation expectations are generated …; in the second, the central bank has to learn the private sector inflation forecasting rule. With imperfect knowledge … accommodates private sector inflation expectations) is no longer constant across the disinflation, but becomes state …