Monetary Policy Frame works after the Global Financial Crisis: is there a Convergence Towards an Integrated Inflation Targeting (IIT)?

This paper revisits the evolution of monetary policy frameworks after the Global Financial Crisis focussing on Middle-Income Countries that have adopted Inflation Targeting. These countries face challenges arising from spillovers of large capital flows, exchange rate volatility and credit booms that threaten their financial stability. To address these, they have been combining interventions in foreign exchange markets, macroprudential tools and monetary policy in an ?integrated monetary policy framework? (IIT) aiming to attain both macroeconomic and financial stability objectives. The approach is integrated because monetary and macroprudential policies operate largely through the same channels. They affect the cost at which the public borrows, and as a result, they both affect credit growth, which has been linked consistently with macroeconomic and financial instability. In that sense, there could be useful lessons from this experience for some inflation targeting High-Income countries that are small open economies subject to similar challenges.