The approach of inflation targeting: the strategy of the monetary policy to limit the inflationary tide the new zealand experience

International Journal of Development Research

The approach of inflation targeting: the strategy of the monetary policy to limit the inflationary tide the new zealand experience

Abstract: 

The use tools of monetary policy to cure the inflationary tide, especially the interest rate and the exchange rate does not have effective desired to be targets intermediate monetary policy for several reasons related to conception and methods identified and their impacts anticipated, and that the components of the money supply has lost its status as targets intermediate occasion in spite of the ability of central banks controlled with relative ease, and the reason for the loss of their role, especially in dealing with the phenomenon of inflation to the fluctuations that can occur to the levels of these totals as a result of the possibility of instability in demand monetary, and therefore the instability of the rotation speed of these aggregates, has resulted in the existence of these gaps to a shift in the strategy of monetary policy to address the tide inflationary, where it became the new strategy seeks to reach directly to the ultimate goal, and the new strategy to approach based on inflation targeting, the adoption of the goals of Titles Non-traditional those goals, and the inflation rate is predicted a key intermediate objectives in the inflation targeting because of the close correlation between predicted this rate and the actual rate of inflation. Has been initiated in the application of inflation targeting strategy for the first time in 1990, and the form of New Zealand is one of the leading models that exemplary for inflation targeting, given the large autonomy enjoyed by the Central Bank of New Zealand in the formulation and conduct of monetary policy, Where reduced the Rate of Inflation of 17 in 1985 to 03 in1996.and 02 in 2007.

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