Granziera, Eleonora; Jalasjoki, Pirkka; Paloviita, Maritta - 2024
We test for state-dependent bias in the European Central Bank's inflation projections. We show that the ECB tends to … underpredict when the observed inflation rate at the time of forecasting is higher than an estimated threshold of 1.8%. The bias is … errors in the exogenous assumptions on interest rates, exchange rates or oil prices. The state-dependent bias may be …