Inflation Targeting Lite

A New Taxonomy of Monetary Regimes

“…10 Given the absence of a single overarching anchor, it is not surprising that these countries report relatively low commitment and high discretion compared to the other regimes. The inflation targeting lite regime countries are qualitatively different from the implicit price stability anchor countries in that their policy implementation is much less forward-looking and market-oriented, and they intervene more in the foreign exchange market (Stone, 2003a). These differences reflect their multiplicity of policy objectives and less-developed financial markets.…”

“…10 Thirteen of the 20 countries that could be classified as inflation targeting lite in 2001 announced some sort of inflation objective or forecast but they did not adhere to an explicit and dominant inflation target (Stone, 2003a). 11 The inflation targeting lite regime has much in common with the managed floating plus exchange rate regime proposed by Goldstein (2002) for open emerging economies where "plus" is shorthand for a framework that includes inflation targeting and aggressive measures to discourage currency balance sheet mismatching.…”

The Dynamic Behaviour of Implicit Inflation Targets for ‘Inflation Targeting Lite’ Economies

“…While some have already successfully adopted the framework, many emerging economies have only declared their intention to adopt inflation targeting. Stone () defines ‘inflation targeting lite’ (ITL) economies as ‘countries that announce a broad inflation objective but owing to relatively low credibility are not able to maintain inflation as the foremost policy objective’ . Vulnerability to large economic shocks and financial instability, coupled with a relatively weak institutional framework, contributes to the lower credibility of these economies in maintaining an explicit inflation target (Stone, ).…”

An Estimated Dynamic Stochastic General Equilibrium Model for Monetary Policy Analysis in Mozambique

“…This is often thought to correspond to an annual rate of inflation in the low single digits in industrial countries (Bernanke and others, 1999) and single-digit levels in low-income countries (Fischer, 1993;Ghosh and Phillips, 1998). frameworks in the broad sense of having the maintenance of a nominal anchor at their core (Adam and others, 2007). More precisely, they could be described as ''lite'' inflation targeting regimes as in Stone (2003), in which the monetary authority probably aim to bring inflation into the single-digits and maintain financial stability, including through a relatively interventionist exchange rate policy. 5 In this respect, therefore, the relevant policy questions are not wholly those concerned with how, and over what horizon, countries may make the move toward formal inflation targeting; they must also include how best the available instruments of monetary policy be deployed in shock prone mature stabilizers (Adam and others, 2007).…”