The Journey to Inflation Targeting: Easier Said than Done The Case for Transitional Arrangements along the Road

By Bernard J Laurens, Kelly Eckhold, Darryl King, Nils Øyvind Mæhle, Abdul Naseer, Alain Durré

June 25, 2015

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Bernard J Laurens, Kelly Eckhold, Darryl King, Nils Øyvind Mæhle, Abdul Naseer, and Alain Durré. The Journey to Inflation Targeting: Easier Said than Done The Case for Transitional Arrangements along the Road, (USA: International Monetary Fund, 2015) accessed September 18, 2024

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

Countries with evolving monetary regimes that decide to embark on “the Journey to inflation targeting” may not be able to adopt a full-fledged inflation targeting regime immediately. Those countries would be better off adopting transitional arrangements that take advantage of the informational content of monetary aggregates, developing an economic analysis capacity, and concentrating on monetay operations aimed at steering money market interest rates. This approach would allow the central bank to buy time for developing the building blocks for effective monetary policy, support transparent central bank communication, and limit the potential for undesirable outcomes along the road.

Subject: Banking, Inflation, Inflation targeting, Monetary aggregates, Monetary base, Monetary policy, Monetary policy frameworks, Money, Prices, Short term interest rates

Keywords: A number of country, Africa, Balance sheet management, Central bank, Central bank communication, Central bank Independence, Country, Country's authorities, Global, Inflation, Inflation targeting, Monetary aggregates, Monetary base, Monetary policy, Monetary policy framework, Monetary policy frameworks, Monetary policy implementation, Monetary policy transmission, Monetary regime, MT regime, Regime, Regime in place, Transitional regime, WP

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/136
Stock No:

WPIEA2015136
ISBN:

9781513567990
ISSN:

1018-5941

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