We tackle two questions in this paper: In the sovereign debt crisis, what moves the euro area inflation outlook and has … the firm anchoring of medium to long-term inflation expectations been touched? Deriving densities from a new data set on … options on the euro area harmonized index of consumer prices provides us with the full distribution of inflation expectations …

Evidence on the credibility of a central bank's inflation target typically refers to the anchoring of survey …-based measures of inflation expectations. However, both the survey question and the anchoring criteria are only loosely connected to … the actual inflation target used in monetary policy practice. By using the exact wording of the ECB's definition of price …

We study how households adjust their medium-term inflation expectations under the new ECB strategy. We find that survey … respondents make little difference between the previous strategy of targeting inflation rates close to but below 2% and the new … time, expect somewhat higher medium-term inflation. Respondents asked to assume inflation currently running below target …

Since the 2001 recession, average core inflation has been below the Federal Reserve’s 2% target. This deflationary bias …-target inflation corrects the bias, improves welfare, and reduces the risk of deflationary spirals - a pathological situation in which … inflation keeps falling indefinitely. This approach does not entail any history dependence or commitment to overshoot the …

average inflation targeting (AIT). Inflation expectations significantly increase for the treated individuals. When provided … with additional information about near-term inflation, individuals update their expected inflation path in line with the … difference in medium-term inflation expectations from our survey results. Under AIT, inflation is substantially less volatile and …

This paper analyzes the time-varying credibility of the Fed's inflation target in an empirical macro model with … asymmetric information, where the public has to learn about the actual inflation target from the Fed's interest rate policy. To …-term inflation expectations of professionals with the perceived inflation target. …

strategies with a strong history dependence lose their advantage over inflation targeting in mitigating a demand …-driven recessions when interest rates are constrained by the ELB. For supply shocks, inflation t argeting o utperforms h istory …-dependent r ules f or a s ufficiently high degree of BR. An exponential average inflation targeting rule, which features a …

strategy to address future ELB episodes. The central bank can offset some of the inflation-induced learning loss by deviating … from its new strategy, but this decision comes at the cost of higher near-term inflation and greater uncertainty about …

We use a representative online survey to investigate the inflation expectations of German consumers and the credibility … of the ECB's inflation target during the recent high inflation period. We find that credibility has trended downwards … since summer 2021, reaching an all-time low in April 2022. The high correlation between inflation expectations and the …

these trends requires targeting a significantly positive inflation target. Relative price trends shift the optimal in ation … account in the present paper may push up the optimal inflation targets further. The welfare costs associated with targeting … zero inflation turn out to be substantial and range between 2.1% and 4.5% of consumption in present-value terms. …