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Inflation-Forecast Targeting; Applying the Principle of Transparency

Kevin Clinton, Charles Freedman (), Michel Juillard (), Ondra Kamenik, Douglas Laxton () and Hou Wang

No 15/132, IMF Working Papers from International Monetary Fund

Abstract: Many central banks in emerging and advanced economies have adopted an inflation-forecast targeting (IFT) approach to monetary policy, in order to successfully establish a stable, low-inflation environment. To support policy making, each has developed a structured system of forecasting and policy analysis appropriate to its needs. A common component is a model-based forecast with an endogenous policy interest rate path. The approach is characterized, among other things, by transparent communications—some IFT central banks go so far as to publish their policy interest rate projection. Some elements of this regime, although a work still in progress, are worthy of consideration by central banks that have not yet officially adopted full-fledged inflation targeting.

Keywords: Central banks and their policies; Inflation targeting; Monetary policy; Optimal Control, inflation, interest, interest rate, central bank, General, (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-for, nep-mac and nep-mon
Date: 2015-06-24
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