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A decade of inflation targeting in the world: what do we know and what do we need to know?
The emergence of inflation targeting over the last ten years represents an exciting development in central banks' approach to the conduct of monetary policy. After initial adoption by New Zealand in 1990, a growing number of central banks in industrial and emerging economies have opted for inflation ...
Negative interest rates: lessons from the Euro area
In June 2014 the European Central Bank (ECB) decided to cut the rate on its deposit facility (DFR) by 10 basis points (bp) into negative territory an unprecedented move as no major central bank had used negative rates before. This decision was part of a more comprehensive monetary policy easing package ...
Quantitative easing and financial stability
Since the global financial crisis of 2008–09 many of the leading central banks have dramatically increased the size of their balance sheets and have shifted the composition of the assets that they hold toward larger shares of longer-term securities (as well as toward assets that are riskier in other ...
Inflation targeting versus price-path targeting: looking for improvements
The world’s central banks have undergone dramatic changes in the past fifteen years. Increases in independence and transparency have been coupled with a shift in focus. Price stability is now the paramount objective for the vast majority of modern central bankers. Combined, these changes in central ...
Inflation targeting in financially stable economies: has it been flexible enough?
The international financial crisis and Great Recession of 2008- 09 called for a range of significant policy measures by central banks beyond aggressive interest rate cuts. Measures have ranged from improving international coordination to purchasing local private loan portfolios and direct intervention ...
Monetary policy under financial turbulence: an overview
The financial crisis that started in 2007 brought the global economy to the brink and in many respects it is still unfolding especially in Europe. How to understand and deal with the crisis has naturally been the subject of fierce debates that continue today. However some consensus appears to be ...
Sterilized foreign exchange interventions under inflation targeting
Inflation targeting needs exchange rate flexibility. If the policy interest rate is geared to achieving the inflation target the central bank must be willing to accept the resulting exchange rate. Simply put if the central bank has both an inflation target and an exchange rate target the private sector ...
Heterodox central banking
In response to the current global crisis the U.S. Federal Reserve and other central banks around the world have implemented diverse policy measures including purchasing a wide range of securities lending to financial institutions intervening in foreign exchange markets and paying interest on reserves. ...
Inflation targeting and the anchoring of inflation expectations in the Western hemisphere
Many central banks have adopted a formal inflation-targeting framework based on the belief and the theoretical predictions that an explicit and clearly communicated numerical objective for the level of inflation over a specified period would, in itself, be a strong communication device that would help ...
Inflation targeting under imperfect knowledge
A central tenet of inflation targeting is that establishing and maintaining well-anchored inflation expectations are essential. Well-anchored expectations enable inflation-targeting central banks to achieve stable output and employment in the short run, while ensuring price stability in the long run. ...