The term structure of firms' inflation expectations

Miguel Mello (), Jorge Ponce and Juan Medina
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Miguel Mello: Banco Central del Uruguay

No 2023004, Documentos de trabajo from Banco Central del Uruguay

Abstract: The share of firms that differentiate their inflation expectations between one-year and two-year horizons is a relevant statistic for changes in inflation expectations. Furthermore, firms that obtain information from the central bank are more likely to distinguish between horizons and forecast convergence of inflation expectations toward the inflation target. Decision-makers tend not to differentiate between horizons, but when they do, they are more likely to predict convergence. External advisors tend to differentiate between horizons and are more likely to predict divergence. The results highlight the importance of analyzing inflation expectations formation by firms for understanding inflation dynamics and conducting effective monetary policy.

Keywords: Inflation expectations; Inflation dynamics; Monetary Policy (search for similar items in EconPapers)
JEL-codes: D83 D84 E31 E52 E58 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2023
New Economics Papers: this item is included in nep-cba, nep-inv and nep-mon
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