Financial Crisis, Low Inflation Environment and Short-Term Inflation Expectations in Poland
To what extent the financial crisis, whose sharp phase began in 2008, and low inflation environment that started in 2013 have affected inflation expectations in Poland? Have inflation expectations of the private sector become more forward-looking? Is monetary policy still able to influence those expectations as compared with the pre-crisis period? These are the main questions addressed in this study. To answer them we analyse survey-based measures of inflation expectations of consumers, enterprises and financial sector analysts. Estimation of simple and extended hybrid models of inflation expectations combined with the verification of the orthogonality of expectational errors with respect to available information leads us to the conclusion that since 2008 the share of enterprises and financial sector analysts making improved use of available information and producing forward-looking forecasts has increased. Their expectations have become more sensitive to interest rate changes and developments in the real economy. However, at the same time enterprises' inflation expectations have become less influenced by the NBP inflation target and more responsive to current inflation. The formation of consumer inflation expectations has not been affected significantly. (original abstract)
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