The Best Economic Environment for Inflation Targeting

INTRODUCTION: Over the past 20 years, many countries, including Canada and Australia, have formulated "clear inflation targets" due to concerns about high cost of "fluent inflation" (Svensson, 1996, p. 1). , 2009, p 6). Mishkin proposed the definition of inflation target (IT). This is a monetary policy strategy aimed at achieving price stability within a specific range (Mishkin, 2000). As Mishkin briefly shows, IT's "future accuracy" digital goal establishes a transparent and reliable commitment (Mishkin, but this is not a cautious policy.

Age of inflation target - that is. Keeping the inflation rate within a certain range - It may have recently started in Egypt. From a nationwide experience, you can see that inflation targeting is the best policy for monetary policy. Recent Egyptian monetary policy seems to be more sensitive to inflationary pressures but without the core inflation index the Egyptian central bank made a goal decision based on the inflation rate issued by the CAPMAS ready consumer price index It is noteworthy.

Inflation targeting is a monetary policy mechanism whose decision is directly based on future expected inflation rates for targets for which decisions were made. In recent years, most countries have adopted inflation targets after disappointing the monetary policy objectives. Its primary goal is to stabilize the price of monetary policy. Empirical evidence suggests that policy makers are most useful when they need to establish a reliable commitment to low inflation. The advantage of the inflation targeting strategy is that it focuses directly on the ultimate goal of price stabilization, so that the public is easy to understand these strategies. They provide transparent guidance on whether monetary policy is ongoing and committed and explain the creditworthiness of the central bank based on whether the stated goal has been achieved (IMF 1996)