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Inflation target credibility and the Taylor rule

Dieter Nautz

Contemporary Economic Policy2026https://doi.org/10.1111/coep.70028article
AJG 2ABDC B
Weight
0.50

Abstract

We investigate how the monetary policy of the European Central Bank affects consumers' perceptions about the credibility of the inflation target. Monetary policy is assessed by the gap between the actual policy rate and a Taylor rate to approximate the interest rate expected by the public. Drawing on survey data for German consumers, our results suggest that the massive dent in inflation target credibility observed from 2021 to 2023 could have been ameliorated by a more decisive tightening of monetary policy. Therefore, simple outcome‐based interest rate rules may deserve more attention in the communication of monetary policy.

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https://doi.org/https://doi.org/10.1111/coep.70028

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@article{dieter2026,
  title        = {{Inflation target credibility and the Taylor rule}},
  author       = {Dieter Nautz},
  journal      = {Contemporary Economic Policy},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/coep.70028},
}

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Inflation target credibility and the Taylor rule

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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