The United Kingdom's Experience with Inflation Targeting

Download or read book The United Kingdom's Experience with Inflation Targeting written by International Monetary Fund and published by International Monetary Fund. This book was released on 1998-06-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.