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Measuring Disagreement In UK Consumer And Central Bank Inflation Forecasts

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Executive Summary

The authors provide a new perspective on disagreement in inflation expectations by examining the full probability distributions of UK consumer inflation forecasts based on an adaptive bootstrap multimodality test. Furthermore, they compare the inflation forecasts of the Bank of England's Monetary Policy Committee (MPC) with those of UK consumers, for which they use data from the 2001-2007 February GfK NOP consumer surveys. The analysis indicates substantial disagreement among UK consumers, and between the MPC and consumers, concerning one-year-ahead inflation forecasts.

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