The Power of Bad News: How Mass Media Influences Inflation Expectations
Negative news in the media covering the overall economic situation may act as a meaningful predictor of the dynamics of Russians’ inflation expectations and their current inflation perceptions. These are most driven by news about the ruble exchange rate and economic crisis.
What is open to the Bank of Russia, while remaining closed for analysts?
A central bank may have an information advantage enabling it to better forecast macroeconomic indicators and, hence, make decisions that are not expected by the market. This advantage may exist both in reality and solely in the form of the market’s belief in it.
‘Don’t Get Me Wrong’: the Central Bank’s Language
Central banks strive to speak clearly and simply – this is critical to effectively targeting inflation. We assessed the comprehensibility of the Bank of Russia's communications using neural networks – it showed that the level of its texts is rather complicated for the public.