Researchers say hitting lower bound has little impact on expectations
Persistent deviation from inflation target can still undermine long-term expectations, BIS paper says
Hitting the effective lower bound on interest rates has not had a significant impact on long-term inflation expectations in advanced economies, research published by the Bank for International Settlements finds.
Richhild Moessner and Előd Takáts note many central banks have seen inflation persistently below target since the 2008 financial crisis. They explore whether this has “de-anchored” long-term inflation expectations, a process which they define as a greater sensitivity to changes in short
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