Inflation targeting regime performance and exchange rate volatility in developing economies

Since the monetary policy strategies such as exchange rate targeting and monetary targeting did not give the desired results in terms of decreasing inflation, the inflation targeting regime came into the agenda with the 1990s. In the late 1990s, the inflation-targeting regime, which is the monetary policy regime in which future inflation is targeted and announced to the public without essentially setting intermediate targets, began to be widely used in developing countries. The performance of the inflation targeting regime in the fight against inflation in developing countries with high inflation rates differs from country to country. In this study, three major emerging economies, Turkey, performance and exchange rate volatility of the inflation targeting regime in the examples of Brazil and Mexico were examined. At the end of the study, it is aimed to determine the conditions under which inflation targeting regime will be successful and fail in developing countries by examining country examples.