The United Kingdom's Experience with Inflation Targeting

International Monetary Fund

No 1998/087, IMF Working Papers from International Monetary Fund

Abstract: This paper reviews the first five years’ experience with inflation targeting in the United Kingdom. It concludes that inflation performance was not significantly different under inflation targeting than predicted by a VAR model estimated in the period prior to participation in the exchange rate mechanism (ERM). Both short- and long-term interest rates were lower than predicted, however, which is consistent with the interpretation that some gains in credibility were achieved under the inflation targeting regime.

Keywords: WP; monetary policy; interest rate; ERM; inflation targeting; monetary framework; United Kingdom; inflation targeting period; boosts credibility; inflation targeting entail; inflation targeting experience; inflation performance; inflation-targeting framework; surprise inflation; Inflation; Long term interest rates; Short term interest rates; Vector autoregression; Australia and New Zealand; Global (search for similar items in EconPapers)
Pages: 29
Date: 1998-06-01
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Citations: View citations in EconPapers (5)

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