Do inflation targets anchor inflation expectations?

- We study more than 80,000 inflation forecasts for 22 inflation targeting countries.
- We use a robust test to study potential anchoring effects.
- Most forecasters scatter their forecasts away from the inflation target.
- We report results of several robustness checks.

We suggest a simple test of whether an inflation target anchors private-sector inflation expectations. The test is easy to compute and it is robust to various sources of misspecification. The test may be a useful alternative to dispersion measures commonly studied in research on inflation targeting. Using data for 22 inflation targeting countries, we find for many countries that the forecasters scatter their inflation forecasts away from the inflation target. We account for the endogeneity of inflation targets, we study the variability of our finding across countries and across time, and we study to which extent our results depend on the level and variability of inflation targets.