.@CRISILLimited presents a very deep dive on 'Whither #Inflation?' Many excellent insights emerge fro their analysis, especially on India #Food price inflation. They provide a great survey-based comparison of the general public's Inflation #Expectations: Before and After the introduction of Flexible Inflation Targeting in India (it was introduced 27 June 2016) and a particularly interesting comparison of the evolution of inflation expectations among the Public versus how they evolved for Forecasters.
While public inflation expectations did indeed come down after Flexible Inflation Targeting was
introduced, the expectations are still noticeably higher than actual, realized inflation. And while realized inflation did come down after Flexible Inflation Targeting was introduced, that was mostly because
food inflation decreased (and that happened from idiosyncratic factors such as a good monsoon). The bottom line is that while both inflation and inflation expectations came down after Flexible Inflation Targeting, the decrease cannot be unambiguously attributed to monetary policy actions. Indeed, when FIT was proposed as a monetary framework for India, the biggest drawback foreseen was in monetary policy transmission, which even now, with the FIT framework being nearly 3 years old, is still an issue. via @EconomistDK
