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

42 Pages Posted: 26 May 2013

See all articles by Gisle James James Natvik

Gisle James James Natvik

BI Norwegian Business School - Department of Economics

Nikola Mirkov

Swiss National Bank

Date Written: April 8, 2013

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.

Keywords: interest rates, forecasts, Taylor rule, adherence

JEL Classification: E43, E52, E58

Suggested Citation

Natvik, Gisle James James and Mirkov, Nikola, Announcements of Interest Rate Forecasts: Do Policymakers Stick to Them? (April 8, 2013). Norges Bank Working Paper 2013 | 11, Available at SSRN: https://ssrn.com/abstract=2269585 or http://dx.doi.org/10.2139/ssrn.2269585

Gisle James James Natvik

BI Norwegian Business School - Department of Economics ( email )

Nydalsveien 37
Oslo, 0484
Norway

Nikola Mirkov (Contact Author)

Swiss National Bank ( email )

Borsenstrasse 15
Zurich, 8022
Switzerland

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
26
Abstract Views
311
PlumX Metrics