Inflation Targeting

Lessons from Monetary Targeting

1. Success requires correcting overshoots

2. Operating procedures not critical

3. Breakdown of relationship between M and goals made M-targeting untenable: Led to inflation targeting

Inflation Targeting: New Zealand, U.K., Canada

1. Announcement of numerical _ goal

2. Commitment to price stability

3. Communication with ìInflation Reportî

Lessons from Inflation Targeting

1. Decline in _ still led to output loss

2. Worked to keep _ low

3. Kept _ in public eye: reduced political pressures for inflationary policy

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