Targeting core inflation in emerging market economies
Stellenbosch Working Paper Series No. WP23/2014Publication date: 2014
Author(s):
The pre-crisis monetary policy consensus has been challenged on a number of fronts. Even the nominal target, around which the modern consensus developed, has been called into question, with a vigorous recent debate ensuing about nominal income targeting as an alternative. This paper contributes to the controversy by arguing that one important reform of inflation-targeting regimes that deserves more attention is reformulating their targets explicitly in terms of core inflation. Core inflation targeting has a better theoretical grounding from both welfare economics and business cycle perspectives, holds practical advantages for inflation-targeting central banks, and has the promising feature of improving the frankness and accountability of monetary policy.
JEL Classification:E31, E52, E58
Keywords:Inflation, Core inflation, Inflation-targeting, Monetary policy
Download: PDF (221 KB)Login
(for staff & registered students)
BER Weekly
30 January 2023The ongoing, and worsening, power crisis in SA was a major theme at the central bank’s (SARB) Monetary Policy Committee (MPC) meeting last week. Besides the 25bps policy rate hike, most attention was focused on the stark downgrade to the SARB’s real GDP growth forecast for the next three years. ...
Read the full issue
BER Weekly
30 January 2023The ongoing, and worsening, power crisis in SA was a major theme at the central bank’s (SARB) Monetary Policy Committee (MPC) meeting last week. Besides the 25bps policy rate hike, most attention was focused on the stark downgrade to the SARB’s real GDP growth forecast for the next three years. ...
Read the full issue