Effective communication of the future stance on inflation control procedures is an essential tool in the repertoire for many central banks, in addition to credible policy choices. Together, this will ease transitory factors, like increased freight cost and potential of price gouging, plus let market provide and demand factors determine prices – not unhinged awareness of future inflation.
Thus, anchoring inflation expectations means consumers can really feel assured and refrain from basing purchasing decisions on fear or speculation.
Aurobindo Ghosh is Assistant Professor of Finance Training and Founding Primary Investigator, Singapore Catalog of Inflation Anticipations (SInDEx) Project, Shelter Kong Chian School of Business, Singapore Management University (SMU).
Khyati Chauhan is Economic Study Assistant, International Monetary Fund – Singapore Training Institute, plus former research assistant for the SInDEx Task, SMU.
Muskan Bagrodia is a Experts candidate for Financial Economics and ur esearch assistant for the SInDEx Project, SMU.
These views are of the co-authors. They do not represent the sights and should not be related to their employers, including IMF and its Professional Board and management. These opinions are usually academic of character and cannot be interpreted as financial suggestions.