Considerations regarding inflation target levels

Andrey Meshcheryakov and Alexander Sukhomlinov

Journal of the New Economic Association, 2024, vol. 62, issue 1, 246-254

Abstract: Most studies on the optimal level of the inflation target point to the necessity for the central bank to maintain full price stability in the economy. At the same time, global experience of inflation targeting, as well as diverse communication of central banks indicate the heterogeneity of inflation target levels and a variety of factors behind their choice. This paper considers a wide range of approaches to determining the most appropriate level of the inflation target for the economy. The systematization of the global practice and theory of monetary policy, as well as the results of the Bank of Russia's Monetary Policy Review, indicate significant benefits of a potential lowering of the inflation target level in Russia in the future from the current 4%. However, as the Bank of Russia officially communicates, an assessment of the feasibility and timing of lowering the inflation target is possible after inflation stabilizes near 4% and general economic uncertainty is reduced.

Keywords: inflation target level; inflation target; inflation targeting; monetary policy (search for similar items in EconPapers)
JEL-codes: E31 E42 E50 E52 E58 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2024:i:62:p:246-254

DOI: 10.31737/22212264_2024_1_246-254

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