Inflation Targeting in the Context of IMF-Supported Adjustment Programs

By Gerd Schwartz, Pau Rabanal, Mario I. Bléjer, Alfredo Mario Leone

March 1, 2001

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Gerd Schwartz, Pau Rabanal, Mario I. Bléjer, and Alfredo Mario Leone. Inflation Targeting in the Context of IMF-Supported Adjustment Programs, (USA: International Monetary Fund, 2001) accessed December 3, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Inflation, Inflation targeting, Monetary base, Monetary policy, Monetary policy frameworks, Monetary stance, Money, Prices

Keywords: Brazil, Fund, Fund program, Inflation, Inflation Targeting, Inflation targeting framework, Monetary base, Monetary policy, Monetary policy frameworks, Monetary Policy Rules, Monetary stance, NIR baseline, NIR floor, NIR loss, Stance vis-à-vis, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/031
Stock No:

WPIEA0312001
ISBN:

9781451845020
ISSN:

1018-5941

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