Inflation expectations unreliable guide to policy – BoE’s Tenreyro
Policy-makers would be “unwise” to use expectations as an intermediate target, MPC member says
Policy-makers risk being led astray if they put too much emphasis on inflation expectations when setting monetary policy, the Bank of England’s Silvana Tenreyro said on June 29.
Tenreyro, who will step down as a member of the monetary policy committee on July 4, said the evidence on the formation of expectations and their impact on actual inflation was “mixed”. A new paper she co-authored finds monetary policy does impact inflation but has little, “if any”, effect on the inflation expectations
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