Is Inflation Targeting Still on Target? The Recent Experience of Latin America

type="main" xml:lang="en"> <title type="main">Abstract</title> <p>This paper reviews the recent experience of a group of Latin American inflation-targeting (IT) nations. We document repeated and large deviations from the standard IT framework: exchange market interventions have been widespread; the real exchange rate has often become a target of policy; and other non-conventional policy tools, especially changes in reserve requirements, but occasionally also taxes and restrictions on international capital movements, have come into common use. As in developed nations, during the 2008–2009 crisis, issues of liquidity provision took centre stage. The emerging modified framework of monetary policy is found to have been generally effective during the crisis but raises several important policy questions. </section>