Inflation targeting - Wikipedia, the free encyclopedia
Inflation targeting is a monetary policy in which a central bank attempts to ... Interest in inflation targeting schemes waned during the Bretton Woods system ...
en.wikipedia.org

FRB Speech, Bernanke--A perspective on inflation targeting--March 25, 2003
A Perspective on Inflation Targeting ... The inflation-targeting approach became more explicit with the strategies ... Although inflation targeting has a ...
www.federalreserve.gov

Inflation Targeting
Inflation targeting is a monetary-policy strategy that was introduced in New ... an inflation-targeting central bank publishes a ... Some inflation-targeting ...
www.princeton.edu

Acquired Assets
Inflation targeting focuses mainly on achieving price stability as ... following the successful implementation of inflation targeting in their countries. ...
www.bsp.gov.ph

FRB: Speech, Gramlich-The Politics of Inflation Targeting-May 26, 2005
... of whether a country should adopt inflation targeting raises several issues. At the theoretical level, inflation targeting is alleged to promote central bank ...
www.federalreserve.gov

Federal Reserve Policy, Inflation, & Inflation Targeting
Inflation Targeting Goals for the Federal Reserve (JEC Study -- May 2002) ... Lessons from Inflation Targeting Experience (JEC Report -- February 1997) ...
www.house.gov

AN INFLATION TARGETING FRAMEWORK FOR JAMAICA:
Inflation Targeting Framework for Jamaica: An Empirical Exploration ... Inflation targeting (IT) as a framework for monetary policy has spread rapidly to developing ...
www.boj.org.jm

Bangko Sentral ng Pilipinas - Monetary Policy
The BSP makes the announcement of the inflation target two years in advance. ... Inflation targeting is an approach to monetary policy that involves the use of a ...
www.bsp.gov.ph

Inflation Targeting and Output Stabilisation
This paper was prepared for a seminar on Inflation Targeting in Brazil' held in ... The inflation-targeting framework has sufficient flexibility to allow for ...
www.stanford.edu

Lessons From Inflation Targeting Experience
The CPI can be used as the inflation target. ... Lesson #3: The Consumer Price Index (CPI) Can Be Used As The Inflation Target. ...
www.house.gov

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Inflation targeting is an economic policy in which a central bank estimates and makes public a projected, or "target," inflation rate and then attempts to steer actual inflation towards the target through the use of interest rate changes and other monetary tools.

Because interest rates and the inflation rate tend to be inversely related, the likely moves of the central bank to raise or lower interest rates become more transparent under the policy of inflation targeting.

Example A) if inflation appears to be above the target, the bank is likely to raise interest rates. This usually (but not always) has the effect over time of cooling the economy and bringing down inflation.

Example B) if inflation appears to be below the target, the bank is likely to lower interest rates. This usually (again, not always) has the effect over time of accelerating the economy and raising inflation.

Under inflation targeting, investors know what the central bank considers the target inflation rate to be and therefore may more easily factor in likely interest rate changes in their investment choices. This is viewed by inflation targeters as leading to increased economic stability.

Inflation targeting is in use by the Bank of England, Bank of Canada, Reserve Bank of Australia, Bank of Korea, South African Reserve Bank and Brazilian Central Bank, among other countries, and there is some empirical evidence that it does what its advocates claim.

Inflation Targeting can refer to either Core inflation, which means inflation without fuel and energy, or regular inflation that includes these prices. In the US, core inflation is used. The inflation target could be a specific inflation (example: this year the target is 2%), but it could also be a range (example: the target is 1%-3%). It is much easier to shoot to a range than to a specific target.

The US Federal Reserve's policy setting committee, the Federal Open Market Committee and its members, regularly publicly state a desired target range for inflation (usually around 1.5-2%), but do not have an explicit inflation target. This is under debate within the Fed, since inflation targeting is usually very successful in other countries because of its transparency and predictability to the markets.

However, some counter that an inflation target would give the Fed too little flexibility to stabilise growth and/or employment in the event of an external Shock (economics). Another criticism is that an explicit target might turn central bankers into what Mervyn King (Governor of the Bank of England) termed "inflation nutters"As quoted on page 158 of Poole, W. (2006), ‘Inflation targeting,’ speech delivered to Junior Achievement of Arkansas, Inc., Little Rock, Arkansas, 16th February 2006. Published in Federal Reserve Bank of St. Louis Review, vol. 88, no. 3 (May-June 2006), pp. 155-164. - that is, central bankers who concentrate on the inflation target to the detriment of stable growth, employment and/or exchange rates. King asserts that this has not happened in practice.

For the moment, the Fed continues without the strict rules of an explicit target. Former Chairman Alan Greenspan, as well as other former FOMC members such as Alan Blinder, typically agreed with its benefits, but were reluctant to accept the loss of freedom involved; current Chairman Ben Bernanke, however, is a well-known advocate of inflation targeting.See his many published works on the subject, for example:Bernanke, B. S. and Mishkin, F. S. (1997), ‘Inflation targeting: a new framework for monetary policy?’ in The Journal of Economic Perspectives, vol. 11, no. 2 (Spring 1997), pp. 97-116.

References

Inflation targeting in practice: the UKexperience
368 Inflation targeting in practice: the UKexperience In this speech, (1) John Vickers, Executive Director and Chief Economist at the Bank of England, discusses theoretical and ...

Inflation targeting - Wikipedia, the free encyclopedia
Inflation targeting is a monetary policy in which a central bank attempts to keep inflation in a declared target range —typically by adjusting interest rates.

Optimal horizons for inflation targeting
Optimal horizons for inflation targeting Nicoletta Batini and Edward Nelson Bank of England, Threadneedle Street, London EC2R 8AH. The views expressed in this paper are those of ...

Amazon.co.uk: Inflation Targeting, Debt, and the Brazilian Experience ...
Amazon.co.uk: Inflation Targeting, Debt, and the Brazilian Experience, 1999 to 2003: F Giavazzi: Books

Measuring inflation targeting's impact on the macroeconomy - Research ...
Sánchez-Fung, José R. (2006) Measuring inflation targeting's impact on the macroeconomy. Applied Economics Letters, ISSN (print) 1350-4851 (In Press)

Inflation targeting and monetary analysis in Chile and Mexico ...
Sánchez-Fung, José R. (2007) Inflation targeting and monetary analysis in Chile and Mexico. Quantitative and Qualitative Analysis in Social Sciences, 1(3), pp. 40-62.

Amazon.co.uk: Inflation Targeting: Lessons from the International ...
Amazon.co.uk: Inflation Targeting: Lessons from the International Experience: Ben S. Bernanke, Thomas Laubach, Frederic S. Mishkin, Adam S. Posen: Books

Centre for International Macroeconomics and Finance
Conference : Inflation Targeting, Central Bank Independence and Transparency. 15-16 June 2007. Cambridge. It is nearly 10 years ago that the Bank of England was ...

Spectator Business
Click here for exclusive articles, offers, tasting notes and discussion. Inflation Targeting

e-Prints Soton - Inflation targeting as a way of pre-commitment
This paper considers an institutional arrangement in which the government assigns a publicly-announced inflation target to an instrument-independent central bank, but retains the ...