Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297448 
Year of Publication: 
2023
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2023-63
Publisher: 
Bank of Canada, Ottawa
Abstract: 
This paper examines the value of direct communication to households about inflation and the uncertainty around inflation statistics. All types of information about inflation are effective at immediately managing inflation expectations, with information about outlooks being more effective and more relevant than that about recent inflation and Bank targets. We observe no downside to communicating about inflation with uncertainty on two measures: the level of expected inflation and uncertainty about it. On a third measure-probabilistic inflation expectations-we observe positive effects: they become more centered around the communicated ranges. However, communication with uncertainty weakens the link between expected inflation and spending plans, a key channel in the transmission of monetary policy. Communicating precise inflation outlooks can lengthen the effects of these communications on households.
Subjects: 
Central Bank Research
Credibility
Inflation and prices
Inflation targets
Monetary policy and uncertainty
Monetary policy communications
JEL: 
C93
D84
E59
E7
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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