## Inflation Targeting and Communication: It Pays Off to Read Inflation Reports

_IMF Working Papers, October 1, 2008_

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## Bibliographic details
- Authors: Katerina Smídková, Viktor Kotlán, David Navrátil
- Published: October 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451870923.001

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### Summary
- Inflation-targeting central banks have a respectable track record at explaining their policy actions and corresponding inflation outturns.
- The paper presents a new methodology for the empirical evaluation of consistency in central bank communication using:
  - a simple forward-looking policy rule, and
  - an assessment of inflation reports.
- Main empirical finding: the three communication tools—inflation targets, inflation forecasts, and verbal assessments of inflation factors contained in quarterly inflation reports—provided a consistent message in five out of six observations in the 2000-05 sample.

### Methodology
- Uses a simple forward-looking policy rule to link communication to policy actions.
- Assesses consistency across three communication tools:
  - inflation targets,
  - inflation forecasts, and
  - verbal assessments of inflation factors in quarterly inflation reports.

### Sample and Data
- Sample period: 2000-05.
- Countries analyzed: Chile, the Czech Republic, Hungary, Poland, Thailand, and Sweden.
- Publication details:
  - Pages: 42
  - Volume: 2008
  - Issue: 234
  - Series: Working Paper No. 2008/234
  - DOI: https://doi.org/10.5089/9781451870923.001
  - Stock No: WPIEA2008234
  - ISBN: 9781451870923
  - ISSN: 1018-5941

### Key Findings
- Communication consistency: three communication tools aligned in five out of six country observations in the 2000-05 sample.
- Reinforces that inflation-targeting frameworks can effectively explain policy actions and inflation outcomes when communication is consistent across targets, forecasts, and report narratives.

### Subjects and Keywords
- Subject: Central bank policy rate, Communications in revenue administration, Economic forecasting, Inflation, Inflation targeting
- Keywords: inflation factor, inflation forecast, inflation report, inflation target, WP

*Source: IMF Working Paper No. 2008/234 (DOI: https://doi.org/10.5089/9781451870923.001).*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/inflation-targeting-and-communication-it-pays-off-to-read-inflation-reports-22344_