## Inflation Targeting in the Context of IMF-Supported Adjustment Programs

_IMF Working Papers, March 1, 2001_

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## Bibliographic details
- Authors: Gerd Schwartz, Pau Rabanal, Mario I. Bléjer, Alfredo Mario Leone
- Published: March 1, 2001
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451845020.001

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### Central argument
- The IMF's traditional monetary conditionality—a ceiling on net domestic assets of the central bank and a floor on its net international reserves—should be adapted in IMF-supported adjustment programs with countries that have a framework of explicit inflation targets for the implementation of monetary policy.
- The adaptation should enhance correspondence and consistency between:
  - the monetary objectives of the central bank and the targets established under the IMF-supported adjustment program, and
  - the different instruments used to achieve the policy objectives and targets.

### Options reviewed and analytical approach
- The paper reviews various general options for adapting IMF monetary conditionality to inflation-targeting frameworks.
- It evaluates how different conditionality designs can improve alignment between program targets and central bank objectives.
- The analysis uses the case of Brazil as an example to demonstrate practical implementation of the reviewed options.

### Brazil case example
- The case of Brazil is used to illustrate how the general options for adapting monetary conditionality may be implemented in practice.

### Policy implications and recommendations
- Adapt IMF monetary conditionality in programs with inflation-targeting frameworks to:
  - Improve correspondence between IMF program targets and central bank monetary objectives.
  - Ensure consistency between the instruments (for example, controls on net domestic assets and net international reserves) and the policy objectives and targets of both the central bank and the IMF-supported program.

### Subjects and keywords
- Subject: Inflation, Inflation targeting, Monetary base, Monetary policy, Monetary policy frameworks, Monetary stance, Money, Prices
- Keywords: Brazil, Fund, Fund program, Inflation, Inflation Targeting, inflation targeting framework, Monetary base, monetary policy, Monetary policy frameworks, Monetary Policy Rules, Monetary stance, NIR baseline, NIR floor, NIR loss, stance vis-à-vis, WP

*Inflation Targeting in the Context of IMF-Supported Adjustment Programs — IMF Working Paper No. 2001/031*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/inflation-targeting-in-the-context-of-imf-supported-adjustment-programs-4016_