target growth rate. The expected future inflation rate rises,which is reflected in a higher nominal Interest rate.This paper … explanation,expected inflation, one would expect it to depreciate. We render these claims more concrete by a formal model, a …

future path of inflation. Mishkin (1990) has recently shown that the spread between the 12-month and 3-month interest rates … helps to predict the difference between the 12-month and 3-month inflation rates. His approach however, lacks a theoretical … the problem of predicting the inflation spread. It is shown that the appropriate indicator of expected inflation can make …