Fredrik N G Andersson
Associate professor
Inflation targets and the benefits of an explicit tolerance band
Author
Summary, in English
Inflation-targeting central banks commonly fail to hit their official inflation targets, so targets are combined with a tolerance band which is either implicit or explicit. Taking the Swedish Riksbank as an example, this column argues that adopting an explicit tolerance band would better communicate to the public the central bank’s lack of full control over the rate of inflation and thus foster public confidence in monetary policy, and it would also increase the central bank’s ability to stabilise the economy. The width of the band can be derived from the historical inflation outcome.
Department/s
- Department of Economics
Publishing year
2017-05-08
Language
English
Links
Document type
Web publication
Publisher
voxeu.org
Topic
- Economics
Keywords
- central banks
- inflation
- inflation targeting
- monetary policy
- EU
- eurozone
- price stability
Status
Published
Research group
- Knut Wicksell Centre for Financial Studies