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Does Inflation Targeting Anchor Inflation Expectations In India? Evidence From Surveys Of Household And Professional Forecasters

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  • Irfan Ali K C

    (University of Hyderabad, India.)

Abstract

This study examines whether Inflation Targeting (IT) anchors household and professional forecasters expectations in India. It investigates whether food and nonfood inflation affect anchoring inflation expectations differently. Primarily, the results indicate significant decreases in the level and variability of expectations. Further, it provides evidence of successful anchoring for professional forecasters and household expectations. However, it also found food inflation assists anchoring of expectations, while the non-food inflation doesn’t. The results suggest the central bank to emphasize more on non-food inflation for better anchoring prospects. Additionally, the study identifies food inflation as the primary contributor to headline inflation variability.

Suggested Citation

  • Irfan Ali K C, 2024. "Does Inflation Targeting Anchor Inflation Expectations In India? Evidence From Surveys Of Household And Professional Forecasters," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 27(Spesial I), pages 131-154, Februari.
    • Handle: RePEc:idn:journl:v:27:y:2024:i:sih:p:131-154
    DOI: https://doi.org/10.59091/2460-9196.2164
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    More about this item

    Keywords

    Inflation targeting; Variability; India; Forecasters;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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