Considerations on the Explicit Inflation Targeting Framework

This article examines the explicit inflation-targeting framework as a monetary policy strategy that seeks a public commitment from authorities to keep inflation within a defined range. The research focuses on the relevance of this approach in the context of the dynamic inconsistency of discrete monetary policies and its impact on the credibility of central banks. It analyzes the experiences of New Zealand, Canada, and the United Kingdom since the implementation of this framework, beginning in the 1990s, discussing variables such as core inflation and fiscal-monetary coordination. Methodologically, the study is based on a comparative analysis and policy review, highlighting the importance of transparency in communicating objectives and expectations. The results indicate that the adoption of an inflation target has led to a significant decline in inflation in the countries studied, thereby strengthening the credibility of monetary policies. The implications suggest that a robust accountability framework and central bank independence are crucial to the scheme’s success in controlling inflation. (Abstract and audio: Department of Economic Publications)