The United Kingdom's Experience with Inflation Targeting [electronic resource]
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TextSeries: IMF Working Papers; Working Paper ; No. 98/87Publication details: Washington, D.C. : International Monetary Fund, 1998Description: 1 online resource (29 p.)ISBN: 1451850999 :ISSN: 1018-5941Subject(s): Central Bank | Inflation Targeting | Inflation | Long-Term Interest Rates | Monetary Framework | United KingdomAdditional physical formats: Print Version:: The United Kingdom's Experience with Inflation TargetingOnline resources: IMF e-Library | IMF Book Store Abstract: This paper reviews the first five years' experience with inflation targeting in the United Kingdom. It concludes that inflation performance was not significantly different under inflation targeting than predicted by a VAR model estimated in the period prior to participation in the exchange rate mechanism (ERM). Both short- and long-term interest rates were lower than predicted, however, which is consistent with the interpretation that some gains in credibility were achieved under the inflation targeting regime.
This paper reviews the first five years' experience with inflation targeting in the United Kingdom. It concludes that inflation performance was not significantly different under inflation targeting than predicted by a VAR model estimated in the period prior to participation in the exchange rate mechanism (ERM). Both short- and long-term interest rates were lower than predicted, however, which is consistent with the interpretation that some gains in credibility were achieved under the inflation targeting regime.
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