Operational framework of inflation targeting: what promises do country experiences make to the CBAR?

Salman Huseynov () and Shaig Adigozalov ()
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Salman Huseynov: Central Bank of Azerbaijan Republic
Shaig Adigozalov: Central Bank of Azerbaijan Republic

No 1507, Working Papers from Central Bank of Azerbaijan Republic

Abstract: The CBAR plans to make a transition from the current peg regime where exchange rate acts as a “nominal anchor†to an inflation targeting (IT) regime. All leading central banks which adhere to an IT regime adopt a respective operational framework consistent with the announced monetary regime. Unfortunately, in compared to the transmission mechanism of the monetary policy which is under the spotlight, operational frameworks are not that much illuminated. This study explores a relatively “least conspicuous facet†of monetary policy, mainly focusing on experiences of various leading central banks. In addition, this paper analyzes the current operational framework of the Bank, pointing out the constraints and proposes several recommendations on how to adopt a proper operational framework for the new regime.

Keywords: Inflation targeting; operational framework; transmission (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2015-04-25
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Persistent link: https://EconPapers.repec.org/RePEc:aze:wpaper:1507

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