Credibility of Inflation Targets in Poland

This paper empirically investigates credibility of inflation targets in Poland. It proposes a new methodology to estimate the impact of policy announcements on survey-based inflationary expectations. Credibility of inflation targets in Poland have been high – the public seems to have attached greater weight to policy announcements than to past macroeconomic developments, particularly after the formal introduction of inflation targeting. The proposed Bayesian approach makes efficient use of available information to provide an intuitive, time-varying measures of credibility.