ECB Paper Sees Signs Inflation Expectations Are Deanchoring
- Researchers say forecasts based less on ECB inflation goal
- Analysts use shorter-term ECB projections, actual inflation
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Euro-area inflation expectations have become less dependent on the European Central Bank’s target and more on its shorter-term projections, according to a study of survey-based projections that raises the question of potential risk to the ECB’s credibility.
“Our analysis suggests that in recent years, a period characterized by low inflation, increased economic uncertainty, zero lower bound and unconventional monetary-policy measures, inflation expectations display some signs of deanchoring,” Tomasz Lyziak and Maritta Paloviita said in a working paper published on the central bank’s website on Friday.