Inflation Targets as a Monetary Policy Instrument

During the past 7 years, an increasing number of countries have turned to the announcement of explicit inflation targets as a crucial element of the implementation of monetary policy. In this document, we review the experience of some of these countries and derive some lessons to be considered for the appropriate implementation of such scheme. The conceptual framework for the design of monetary policy is also reviewed. In particular, we focus on the main characteristics of final objectives and intermediate targets. The establishment of an inflation target regime is presented as an alternative that could consolidate the credibility of the central bank's policy actions, thus promoting price stability