Interventions and inflation expectations in an inflation targeting economy

In this paper we explore the role that exchange rate interventions may play in determining inflation expectations in Chile. To that end, we consider a set of nine deciles of inflation expectations coming from the survey of professional forecasters carried out by the Central Bank of Chile. We consider two episodes of preannounced central bank interventions during the sample period 2007-2012.

JEL classification: E31, E52, E58, F31

Keywords: Exchange rates, inflation expectations, inflation targeting, interventions