
S6 Ep14: How should we measure expected inflation?
VoxTalks Economics
The Role of Noise in Monetary Policy
Inflation expectations do matter. How much notice should, for example, the European Central Bank be taking off expectations of inflation at the moment if they want to do their job? Ricardo: Imagine that the measures are really garbage. They're just pure noise. In that case, the Clearly Central Bank should ignore them because in response to them, all it's going to be is introducing noise into its policy. But imagine how they're noise, but they're noise that drives people's actions. So even in the case where expectations are filled with noise, even our entire noise, it is still the case that unless they're pure noise that don't drive actions, that don't reflect over reactions,
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