Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets
39 Pages Posted: 9 May 2011 Last revised: 5 Nov 2022
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Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets
Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets
Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets
Date Written: October 1996
Abstract
Inflation targeting is shown to imply inflation forecast targeting: the central bank's inflation forecast becomes an explicit intermediate target. Inflation forecast targeting simplifies both implementation and monitoring of monetary policy. The weight on output stabilization determines how quickly the inflation forecast is adjusted towards the inflation target. Money growth or exchange rate targeting is generally inferior to inflation targeting and leads to higher inflation variability. Commitment to commitment to
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