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Central bank’s forecasts and lack of transparency: An assessment of the effect on private expectations in a large emerging economy

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  • de Mendonça, Helder Ferreira
  • Simão Filho, José
  • Abreu, Vanessa Castro

Abstract

We analyze whether the Central Bank of Brazil’s Inflation Reports projections influences the private’s inflation expectations. Specifically, we investigate how the central bank’s inflation forecasts affect the private sector’s inflation expectations through a qualitative and quantitative examination of the disagreement measure between them. Furthermore, we appraise if the lack of transparency resulting from the difference between the central bank’s inflation forecasts and the realized inflation affects the private’s inflation expectations. Although the findings confirm the previous studies that point out that the central bank transparency can affect the readjustment of market expectations, the results do not rule out the possibility of the central bank’s forecast and private’s inflation expectations being affected reciprocally.

Suggested Citation

  • de Mendonça, Helder Ferreira & Simão Filho, José & Abreu, Vanessa Castro, 2023. "Central bank’s forecasts and lack of transparency: An assessment of the effect on private expectations in a large emerging economy," Economic Systems, Elsevier, vol. 47(2).
    • Handle: RePEc:eee:ecosys:v:47:y:2023:i:2:s0939362522000978
    DOI: 10.1016/j.ecosys.2022.101035
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    Cited by:

    1. Pedersen, Michael, 2024. "The effect of monetary policy on inflation expectations: Evidence from a financial traders survey," Economic Modelling, Elsevier, vol. 137(C).

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    More about this item

    Keywords

    Central bank forecasts; Private forecasts; Inflation; Central bank transparency;
    All these keywords.

    JEL classification:

    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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