Exchange rate interventions and inflation expectations in an inflation targeting economy

  • Pablo Pincheira Brown School of Business, Universidad Adolfo Ibáñez
Keywords: Exchange rates, inflation expectations, inflation targeting, interventions.

Abstract

We explore the impact of exchange rate interventions on inflation expectations and exchange rates in Chile. We consider two episodes of central bank interventions during the sample period 2007-2012. Our analysis indicate that interventions did have an impact on daily exchange rate returns. In terms of inflation expectations, we find that the intervention program carried out in 2008 had a significant, but relatively short-lived, impact on the distribution of inflation expectations at long horizons. In contrast, the intervention carried out in 2011 shows no relevant impact on the distribution of inflation expectations in Chile.
Published
2018-12-27
How to Cite
Pincheira Brown, P. (2018). Exchange rate interventions and inflation expectations in an inflation targeting economy. Economic Analysis Review, 33(2), 43-78. Retrieved from https://www.rae-ear.org/index.php/rae/article/view/655
Section
Articles