Inflation Targeting in the Context of IMF-Supported Adjustment Programs

Author/Editor:

Gerd Schwartz ; Pau Rabanal ; Mario I. Bléjer ; Alfredo Mario Leone

Publication Date:

March 1, 2001

Electronic Access:

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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 argues that 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 which have a framework of explicit inflation targets for the implementation of monetary policy. This adaptation should aim at enhancing correspondence and consistency between the monetary objectives of the central bank and the targets established under the IMF-supported adjustment program, as well as between the different instruments used to achieve the policy objectives and targets. The paper reviews various general options in this regard, and, using the case of Brazil as an example, demonstrates how these options may be implemented in practice.

Series:

Working Paper No. 2001/031

Subject:

Inflation Inflation targeting Monetary base Monetary policy Monetary policy frameworks Monetary stance Money Prices

English

Publication Date:

March 1, 2001

ISBN/ISSN:

9781451845020/1018-5941

Stock No:

WPIEA0312001

Pages:

24

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