Granziera, Eleonora; Jalasjoki, Pirkka; Paloviita, Maritta - 2024
We test for state-dependent bias in the European Central Bank's inflation projections. We show that the ECB tends to … consistent with the aim of managing inflation expectations, as published forecasts play a central role in the ECB's monetary … underpredict when the observed inflation rate at the time of forecasting is higher than an estimated threshold of 1.8%. The bias is …