خلاصة:
Realization of potential benefits of inflation targeting depends on how effectively its strategy is designed and implemented. In practice, inflation targeting Central Banks have tended to execute this approach in broadly similar ways. Implementing inflation targeting has two advantages: transparency and flexibility. Transparency could improve the public understanding of what monetary policy can do and can not do; decreasing the economic and financial uncertainty; and strengthening the accountability of the Central Bank to the government and the general public. On the other hand, flexibility means the Central Banks can react effectively to short-run macroeconomic developments. These two features tend to be mutually reinforcing. Key operational issues that arise in the implementation of inflation targeting include: the choice of the numerical values for the targets; the time horizon over which the target is relevant; the condition under which the target should be modified; how to go about hitting the target; and how to handle unintentional target misses. Making decision about these issues is fully compatible with instrument independence for the Central Bank.
ملخص الجهاز:
The approach of the Deutsche Bundesbank is a good example of combining explicit short-term monetary targets with an explicit long-term inflation target to send clear messages regarding the bank's objectives to the general public.
This target, which technically is only announced for the specific year in question, rarely changes; its function is to inform the general public about the level of inflation that the Deutsche Bundesbank intends to maintain or reduce in the short term.
Transparency improves public understanding of what monetary policy can or cannot achieve and leads to a reduction in financial and economic uncertainties and strengthens the accountability of the central bank to the government and the general public.
It seems that between the two aforementioned choices, instrumental independence better ensures the absence of short-term government political interference and higher accountability of the central bank, with the advantage that in this framework, policies aimed at the final goal will be formulated and implemented in a more democratic manner as much as possible.
Today, many central banks that have implemented the inflation targeting regime publish regular reports on inflation and similar documents that contain a detailed assessment of economic conditions and current information regarding monetary policy and inflation.
Beyond this information, the central bank implementing inflation targeting also bears a responsibility regarding public education; including in the area of policy exchange and which objectives monetary policy can effectively influence and which objectives it cannot achieve.
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