Communicating uncertainty helps curb expectations – BoC paper
But conveying uncertainty about inflation weakens link between inflation and spending plans
Communicating uncertainty over the inflation outlook can help to curb inflation expectations, a new working paper published by the Bank of Canada finds.
“All types of information about inflation are effective at immediately managing inflation expectations, with information about outlooks being more effective and more relevant than that about recent inflation and bank targets,” authors Olena Kostyshyna and Luba Petersen write.
The downside they find to communicating uncertainty is its impact on
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