exclusively on the anchoring of short- to medium-term inflation expectations (Part 2). Several measures show that this anchoring … expectations has on the determination of the short- to medium-term inflation rate. From this point of view, observed inflation in … on the other aspect of monetary stability: the degree of price-level uncertainty and the anchoring of inflation …

tolerance range policies, characterized by a stronger reaction of the centralbank to inflation when inflation lies outside the … strong reaction, when inflation is far fromthe target, is required to compensate a moderately lower reaction within tolerance …

Using daily data stemming from inflation-indexed markets, we analyse the effects of numerous macroeconomic surprises on … inflation compensation data - the sum of inflation expectations, risk and liquidity premia - in the euro area between 2 January … 2004 and 31 December 2007. Our results suggest that when gauging short and medium-term inflation compensations, market …

-through estimates have declined in response to a change in inflation environment and find evidence of such decline only for import …

found to help rationalizing the hump-shaped response of inflation, without resorting to the counterfactual assumption of …

We study how changes in the value of the steady-state real interest rate affect the optimal inflation target, both in …-for-one: increases in the optimal inflation rate are generally lower than declines in the steady state real interest rate. Our approach … allows us not only to assess the uncertainty surrounding the optimal inflation target, but also to determine the latter while …

We address this question using an estimated New Keynesian DSGE model of the Euro Areawith trend inflation, imperfect … anadjustment of the monetary policy strategy. Under an unchanged monetary policy rule, anincrease in the inflation target of eight … tenth the size of the drop in the real natural rate ofinterest is warranted. Absent an increase in the inflation target, and …

when taking as given the private sector’s expectations of inflation, but acting less shifts these inflation expectations … away from the central bank’s inflation target. In response to the de-anchoring of expectations, the central bank can easily … end up acting as much as it is initially reluctant to do, but without succeeding in putting inflation back on target. This …

inflation, making the model still immune to the forward-guidance puzzle. First, we find that make-up strategies that compensate … for a past deficit of accommodation after an ELB episode have sizably better stabilization properties than inflation … targeting. Second, we find that make-up strategies that always respond to past economic conditions, such as average inflation …