ASSESSMENT OF INFLATION EXPECTATIONS IN THE FINANCIAL MARKET OF UKRAINE
Journal Title: Зовнішня торгівля: економіка, фінанси, право - Year 2017, Vol 1, Issue 90
Abstract
Background. The inflation surge of 2014–2015’s., the absence of preconditions for the transition to inflation targeting regime declared by the National Bank of Ukraine and uncertainty of the monetary policy of NBU raise questions about the complexity of prediction of the dynamics of consumer prices and corresponding impact on them by monetary instruments. In turn, unstable inflation environment is reflected on the deterioration of macroeconomic conditions for economic entities and the possibilities of their long-term investment implementation. Eventually, it requires more fundamental approaches to the formation of the projection system, which would consider a wider range of factors of impact on inflation. The analysis of recent researches and publications. The group of domestic and foreign scientists, namely B. Karpinskyi, O. Pyzh, K. Kirieyeva, V. Shevchuk, A. Estrella, F. Mishkin, Zh. Faus, P. Milonas and others dealt with the problems of detection of indicators of formation of inflation expectations on financial markets. The aim of the research is determination of the indicators of formation of inflation expectations on the financial market of Ukraine. Materials and methods. Legislative and normative acts on regulation of banking institutions activity, reference and analytical materials of National Bank of Ukraine, information materials of leading central banks of the world, research materials of the OECD, the IMF and others became the information basis. Systematic approaches to the study of economic phenomena on financial markets of Ukraine and the world, economic and mathematical modeling with the use of statistical data of the NBU and Ukraine State Statistics and statistical comparison of factual basis became the methods of the research. Results. Traditional approach to forecast of inflation, which is used by central banks, focuses on the implementation of forecasts based on separate monetary aggregates, as well as on the consideration of the long-term trends, including deviation of actual from potential amount of nominal GDP, real business cycles and expectations of economic entities. In the article the author considers the issue of inflation forecast, deviations of its actual values from the predicted level and adjustment factors of such forecasts; analyzes the impact of spreads for government bonds and market credit rates, redemption of government bonds in the portfolio of the central bank and the yield curve on core inflation; explores the impact of exchange rate volatility on inflation; offers the ways of consideration of inflation risks in the expectations of the financial market subjects. Conclusion. On the basis of the conducted research the author offers the use of spreads in yield on the financial market as an additional factor for adjustment of the inflation forecast. The author offers determination of its level through core consumer price index, which is mainly influenced by internal factors. Also, he considers appropriate the introduction and proper application of composite index of hryvnias corporate bonds for determination of spreads and the expected risk premium for the consideration of the risks and the corresponding expectations of the corporate bonds market. In further researches he suggests the determination of the risk premium by the decomposition of total risk on market factors (credit risk of the borrower, date, volume) and the implicit inflation expectations (expressed in terms of spreads) with an aim of timely respond to the accumulation of problem debt of bank borrowers and its negative effects. Taking into account the need to consider the negative effects of exchange rate shocks in inflation dynamics, he offers a partial targeting of the exchange rate volatility, determination of the maximum acceptable ranges of exchange rate fluctuations (in standard deviations) and their appropriate adjustment depending on the periods and the state of supply of liquidity on the financial market.
Authors and Affiliations
Serhiy KULPINSKYI
Keywords
Related Articles
- EP ID EP235041
- DOI -
- Views 89
- Downloads 0
NATIONAL BRANDS INTHE GLOBAL ECONOMY: A COMPARATIVE ANALYSIS
Background. The current trend has shown a marked improvement in the positions of developing countries in the ratings of national brands. Their success is explained by increased attractiveness in specific areas, but the a...
INTERNATIONAL EXPERIENCE OF THE IMPLEMENTATION OF REPO TRANSACTIONS
Background. The development of financial operations in Ukraine causes necessity of studying the experience of Western countries in relation to the carrying out of REPO transactions, particularly from the point of view of...
MEDIATION IN UKRAINE: PROBLEMS OF THEORY AND PRACTICE
Background. Domestic and international experience shows that the introduction of alternative ways of dispute resolution along with the justice system is the most effective prerequisite for resolving legal conflicts and d...
BUDGET EXPENDITURES PLANNING IN THE SYSTEM OF FINANCIAL AND ECONOMIC REGULATION
Background. At the present stage of improving of financial and budget relations in Ukraine the need for development of budget planning system and improving of the efficiency of budget expenditures increases. The above me...
ACTIVATION OF ENVIRONMENTAL DIPLOMACY IN THE FORMAT OF CONVERGENCE OF THE STATES
Background. The latest political, economic, social and environmental components that are present in the transformations of the economic systems of the countries intensify globalization in a dynamically changing environme...