Inflation Targeting Turns 20
Inflation Targeting Turns 20
Inflation Targeting Turns 20
Targeting
Turns 20
Scott Roger
T
wo decades ago, New Zealand adopted a new
approach to monetary policy, based on achiev-
ing a specific target for inflation. What made
this approach new was the explicit public com-
mitment to controlling inflation as the primary policy
objective and the emphasis on policy transparency and
accountability.
Today 26 countries use inflation targeting, about half
of them emerging market or low-income economies (see
table). Moreover, a number of central banks in more
advanced economies—including the European Central
Bank, the U.S. Federal Reserve, the Bank of Japan, and the
Swiss National Bank—have adopted many of the main
elements of inflation targeting, and several others are in
the process of moving toward it.
A growing This article examines how inflation targeters have performed over the past 20 years—includ-
ing during the commodity price shocks of 2006–08 and the global financial crisis that began in
number of 2007. The article also highlights some especially important issues inflation targeters are likely to
countries face in the next few years.