Inflation targeting: Country practices and Turkey

Inflation targeting is a strategy of monetary policy which uses inflation forecasting instead of an intermediate goal in order to achive price stability. With the realization that high inflation harms economic growth, and that price stability is a necesssary condition for continuous growth and low unemployment, there is a growing consensus that an inflation targeting strategy is the right and most practical way of achieving those objectives. Success of the this strategy that New Zealand, hava applied since 1990, gave rice to an alternative strategy for other countries. Inflation targeting strategy have been so powerful that the Central Banks of both the industrialized and the developing economies alike have declared that maintaining price stability at the lowest possible rate of inflation is their only objective.The objective of this study is to examine arrangements and experiences in seven chosen countries that have adopted explicit inflation targets as guides for the conduct of monetary policy. The countries in question are Canada, New Zealand, Sweden, United Kingdom, Israel, Brazil and Chile. As these countries instituted their inflation targets with substantially different legislative provisions and targetting procedures, their experiences should eventually provide useful information concerning the differences and similarities of policy practices.Key Words1. Inflation targeting2. Price stability3. Impossible trinity4. Central Bank5. Monetary policy