Inflation News and Euro Area Inflation Expectations

Author/Editor:

Juan Angel Garcia ; Sebastian Werner

Publication Date:

July 19, 2018

Electronic Access:

Free Full Text. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Do euro area inflation expectations remain well-anchored? This paper finds that the protracted period of low (and below-target) inflation in the euro area since 2013 has weakened their anchoring. Testing their sensitivity to inflation and macroeconomic news, this paper expands existing results in two key dimensions. First, by analyzing all available (advanced) inflation releases. Second, the reactions of expectations are investigated at daily, time-varying and intraday frequency regressions to add robustness to our conclusions. Results point to a significant impact of inflation news over recent years that had not been observed before in the euro area.

Series:

Working Paper No. 18/167

Subject:

English

Publication Date:

July 19, 2018

ISBN/ISSN:

9781484363010/1018-5941

Stock No:

WPIEA2018167

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

59

Please address any questions about this title to publications@imf.org