The forecast of the professional forecasters can be considered rational as they apparently process all available information including the central bank’s likely reaction function to arrive at their medium- to long-term inflation forecasts.
As regards their short-term inflation forecast, as more information becomes available, the forecasters revise their forecasts to incorporate the latest information and the revised quarter ahead forecasts tend to converge to the actual numbers (Chart 4). Sixth, professional forecasters’ long-run inflation expectations have been influenced by the trend in actual inflation.