In an open economy inflation-targeting framework, whether policy-makers should target aggregate or non-traded inflation … inflation process that the paper suggests have occurred over the past two decades: the effect of exchange rate changes on … inflation appears to have become more muted and the inflation process appears to have become better anchored. …

information about inflation expectations – that survey measures of expectations are inconsistent with rational expectations, but … less so for financial markets than households; that actual and expected inflation interact with each other; and that the … foreign exchange market anticipates tighter monetary policy when inflation is higher than expected. The second half of the …