Transcript Inflation Targeting

Inflation Targeting
Prof. Dariusz Filar
Inflation Targets
• Point targets (Great
Britain – 2%; Norway –
2,5%; Mexico – 3%)
• Point targets with
deviation bands
(Sweden – 2% +/- 1pp;
Poland – 2,5% +/- 1 pp;
Brasil – 4,5% +/- 2pp
• Band targets (Australia
– from 2 to 3%; New
Zeland – from 1 to 3%;
RPA – from 3 to 6%)
• Asymetric targets
(Switzerland – always
below 2%; EBC in €uro
Area – below 2%, but
close to this level)
Monetary Policy Transmission (1)
1) Central Bank raises/lowers its reference rate
2) Next day other short-term interest rates
rise/fall
3) Few months later supply of loanable funds
decrease/increase
4) Few months later the long-term real interest
rate rises/falls
Monetary Policy Transmission (2)
5) Up to a year later consumption, investment
and net exports decrease/increase
6) Up to a year later aggregate demand
decreases/increases
7) About a year later real GDP growth rate
decreases/increases
8) About two years later inflation rate
decreases/increases
Reference rate of the National Bank of Poland and core inflation
- Q3/2003 - Q1/2013
7
6
5
4
3
2
1
0
-1
Inflacja bazowa(żyw/ener)
Stopa referencyjna NBP
Difference between CPI and core inflation
Różnica miedzy CPI a inflacją bazową
2.4
2.3
2.3
2.3
2.2
2.1
2
2
1.8
1.8
1.6
1.5
1.6 1.6 1.6
1.5
1.2
1.2
1.1
1.2
1.1 1.1
1
0.9
1
0.9
0.8
0.8
0.7
0.7
0.5
0.8
0.7
0.7
0.5
0.5
0.2
Core inflation and CPI in Poland Q3/2003 - Q1/2013
CPI
5
Inflation
target NBP =
2,5%
4
3
2
1
0
-1
Inflacja bazowa(żyw/ener)