Inflation Targeting in the Context of Imf-Supported Adjustment Programs

25 Pages Posted: 29 Jan 2006

See all articles by Mario I. Blejer

Mario I. Blejer

Central Bank of Argentina

Alfredo Mario Leone

International Monetary Fund (IMF); George Washington University

Pau Rabanal

La Caixa

Gerd Schwartz

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: March 2001

Abstract

This paper argues that the IMF's traditional monetary conditionality - a ceiling on net domestic assets of the central bank and a floor on its net international reserves - should be adapted in IMF-supported adjustment programs with countries which have a framework of explicit inflation targets for the implementation of monetary policy. This adaptation should aim at enhancing correspondence and consistency between the monetary objectives of the central bank and the targets established under the IMF-supported adjustment program, as well as between the different instruments used to achieve the policy objectives and targets. The paper reviews various general options in this regard, and, using the case of Brazil as an example, demonstrates how these options may be implemented in practice.

Keywords: Inflation Targeting, Monetary Policy, Monetary Policy Rules, Brazil

JEL Classification: E52, E31, E17

Suggested Citation

Blejer, Mario I. and Leone, Alfredo Mario and Rabanal, Pau and Schwartz, Gerd, Inflation Targeting in the Context of Imf-Supported Adjustment Programs (March 2001). IMF Working Paper No. 01/31, Available at SSRN: https://ssrn.com/abstract=879392

Mario I. Blejer (Contact Author)

Central Bank of Argentina

Reconquista 266
Edificio Central, piso 7
Buenos Aires, 1003
Argentina

Alfredo Mario Leone

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

George Washington University ( email )

2023 G Street NW
Washington, DC 20052
United States

Pau Rabanal

La Caixa ( email )

Av Diagonal 629
Barcelona, 08028
Spain

Gerd Schwartz

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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