Announcements of Interest Rate Forecasts: Do Policymakers Stick to Them?

Item Type Monograph (Working Paper)
Abstract

If central banks value the ex-post accuracy of their forecasts, previously announced interest rate paths might affect the current policy rate. We explore whether this "forecast adherence" has influenced the monetary policies of the Reserve Bank of New Zealand and the Norges Bank, the two central banks with the longest history of publishing interest rate paths. We derive and estimate a policy rule for a central bank that is reluctant to deviate from its forecasts. The rule can nest a variety of interest rate rules. We find that policymakers appear to be constrained by their most recently announced forecasts.

Authors Mirkov, Nikola & Natvik, Gisle James
Language English
Keywords Interest rates, forecasts, Taylor rule, adherence
Subjects business studies
HSG Classification contribution to scientific community
Refereed No
Date 2013
Publisher SoF
Place of Publication St. Gallen
Series Name SoF Working Paper Series
Number 2013/3
Depositing User Nikola Mirkov
Date Deposited 29 Apr 2013 11:21
Last Modified 27 Feb 2016 15:19
URI: https://www.alexandria.unisg.ch/publications/222510

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Citation

Mirkov, Nikola & Natvik, Gisle James: Announcements of Interest Rate Forecasts: Do Policymakers Stick to Them? SoF Working Paper Series, 2013, 2013/3.

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https://www.alexandria.unisg.ch/id/eprint/222510
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