Does Targeting Inflation Require ‘Inflation Targeting’?

This paper argues that inflation targeting should not be defined too narrowly. The principal objective of a sound monetary policy, namely to provide a credible nominal anchor for the economy, can be achieved with a variety of institutional structures and operational frameworks. It is essential, however, that the objectives of monetary policy be clearly stated and broadly accepted, and that other macroeconomic policies are consistent with the pursuit of price stability. Within these constraints there is room for a number of alternative monetary policy strategies. Countries are well advised to search for policy strategies that are most appropriate for their own economies rather than copying what has worked well in other contexts