Inflation Pressures and Monetary Policy Options in Emerging and Developing Countries—A Cross Regional Perspective
IMF Working Papers, January 1, 2009
Source details
- Canonical URL
- Inflation Pressures and Monetary Policy Options in Emerging and Developing Countries—A Cross Regional Perspective
Other formats
Bibliographic details
- Authors: Inci Ötker, David Vávra, Francisco F. Vazquez, Luis Ignacio Jácome, Karl F Habermeier, Kotaro Ishi, Alessandro Giustiniani, Turgut Kisinbay
- Published: January 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451871487.001
Summary / Scope
- Analyzes the monetary policy response to rising inflation in emerging and developing countries associated with the food and oil price shocks in 2007 and the first half of 2008.
- Reviews inflation developments in a sample of countries covering all regions and a broad range of monetary and exchange rate policy regimes.
- Discusses underlying causes of inflation.
- Provides a synthesis of policy responses taken against the background of:
- conflicting objectives and trade-offs,
- uncertainties regarding the nature of the shocks,
- additional challenges brought on by the global financial turmoil.
- Presents considerations for policy.
Core findings and analysis themes
- Examination of inflation developments across countries with varied monetary and exchange rate regimes.
- Identification and discussion of underlying causes of the 2007–first half of 2008 inflation episodes, including food and oil price shocks.
- Synthesis of the range of policy responses implemented by authorities in emerging and developing countries during the shocks and ensuing turmoil.
- Emphasis on the role of inflation expectations, aggregate demand, and monetary frameworks (including inflation targeting and conventional pegs) in shaping policy choices.
Policy trade-offs and responses
- Highlights conflicting objectives and trade-offs faced by policymakers confronting supply shocks and rising inflation.
- Discusses the uncertainty about whether shocks were predominantly supply-driven or demand-driven and the implications for monetary policy.
- Reviews policy tools and responses across different monetary and exchange rate regimes; situational considerations include:
- the nature of the inflation shock,
- exchange rate policy stance,
- monetary policy framework (including IT country practices),
- financial market developments stemming from global financial turmoil.
Considerations for policy
- Presents considerations for how policymakers might respond to similar inflation pressures, taking into account:
- regime-specific constraints and objectives,
- the need to assess inflation expectations and aggregate demand conditions,
- the interaction between exchange rate policy and domestic monetary policy.