Boosting Central Bank Credibility Lowers Inflation Expectations in Emerging Economies
The article explores how the credibility of central banks affects inflation expectations in six emerging economies. By analyzing data from Turkey, Brazil, the Czech Republic, Chile, Poland, and South Africa, the researchers found that as central banks gain credibility, they are better able to lower inflation expectations. This credibility helps anchor inflation targets and encourages people to look forward when forming their expectations, rather than relying on past trends.