№ 4/2020

Fìnansi Ukr. 2020 (4): 64–81https://doi.org/10.33763/finukr2020.04.064

SCIENTIFIC DISCUSSIONS

KHOKHYCH Dmytro ¹

¹Kyiv National Economic University named after Vadym Hetman
OrcID ID : https://orcid.org/0000-0003-3787-939X

Interaction of consumer prices growth dynamics and inflation expectations in Ukraine

The article studies the formation mechanism of inflation expectations and their impact on the inflation in Ukraine. The dynamics of inflation expectations and their fixing at the target level in the long term, as well as modern economic studies confirming the existence of such a relationship is analyzed. The neo-Keynesian model of the Phillips curve is investigated , where inflationary expectations, which correspond to the natural level of unemployment and full employment, play the main role. This means that expectations are realized in relation to wages and prices and, accordingly, inflation tends to either accelerate or decline. The gradual predictability of inflation implies that in the long term the possibility of choosing between inflation and unemployment disappears. On the example of Ukraine, the analysis of the inflation expectations of several types of agents is carried out : consumers (households), enterprises, banks and professional forecasters. It has turned out that the predictions of economic agents are significantly at odds with the expectations of future inflation, so the central bank, focusing on inflation, takes into account only the expectations of professional forecasters. The dynamics of the actual inflation rate with the expectations of enterprises and households, as well as the correlation between expectations and actual series are shown . The need to strengthen the confidence of economic agents to the National Bank, by improving communication channels is emphasized. Recommendations for strengthening inflation expectations based on the analysis when developing a monetary policy strategy in Ukraine are formulated.

Keywords:trust, inflation, communication, Phillips сurve, monetary policy, expectations, targeting inflation, prices stability

JEL: E31, E52, E58

KHOKHYCH D. . Interaction of consumer prices growth dynamics and inflation expectations in Ukraine / D. . KHOKHYCH // Фінанси України. - 2020. - № 4. - C. 64-81.

Article original in Ukrainian (pp. 64 - 81)

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