Measures of inflation used in inflation projections- experiences of the selected European countries

The article describes the study of central paths projections of CPI inflation and core inflation in central banks of Sweden and Norway. The analysis refers to the possibility of using CPI inflation and core inflation projections as a main tool (intermediate goal) for the implementation of inflation forecast targeting strategy. The study includes a reference of the central path of the CPI inflation projections and core inflation projections (made on assumption of endogenous rate) to the inflation target. The analysis allowed to determine that at the prognostic moment of three years the central paths of core inflation projections scored at or are very close to the target. Implications for the implementation of the inflation forecast targeting (IFT) strategy refer that projection of core inflation can be a typical operational tool anchoring inflation expectations and can be used also as a an intermediate goal of monetary policy because it possesses an ability to achieve the inflation target at the end of the forecasting horizon. The central paths of core inflation projections converge with the inflation target as the time horizon became longer but still remained medium term. Such a result is not given for all the CPI projections