The United Kingdom's Experience with Inflation Targeting

Publication Date:

June 1, 1998

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper reviews the first five years’ experience with inflation targeting in the United Kingdom. It concludes that inflation performance was not significantly different under inflation targeting than predicted by a VAR model estimated in the period prior to participation in the exchange rate mechanism (ERM). Both short- and long-term interest rates were lower than predicted, however, which is consistent with the interpretation that some gains in credibility were achieved under the inflation targeting regime.

Series:

Working Paper No. 1998/087

Subject:

Econometric analysis Financial services Inflation Inflation targeting Long term interest rates Monetary policy Prices Short term interest rates Vector autoregression

English

Publication Date:

June 1, 1998

ISBN/ISSN:

9781451850994/1018-5941

Stock No:

WPIEA0871998

Pages:

29

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