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Moving targets? Inflation targeting frameworks,1990–2025

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  • Claudio Borio
  • Matthieu Chavaz

Abstract

Recent and upcoming reviews of monetary policy frameworks have been putting the spotlight on the evolution of inflation targeting. This article provides context by using a new database of changes to the inflation targeting frameworks of 26 central banks since 1990. We use the data to track changes in the frameworks' flexibility in terms of the specification of the inflation target and the role of other objectives, ie employment (or output) and financial stability. While the specification of the numerical targets has become stricter (eg points rather than ranges), greater flexibility has taken the form of less strict / longer horizons to achieve them and more weight on other objectives, especially employment/output. These trends are typically more pronounced in advanced economies and have widened differences with their emerging market peers.

Suggested Citation

  • Claudio Borio & Matthieu Chavaz, 2025. "Moving targets? Inflation targeting frameworks,1990–2025," BIS Quarterly Review, Bank for International Settlements, March.
    • Handle: RePEc:bis:bisqtr:2503c
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    References listed on IDEAS

    as
    1. Stephen G. Cecchetti & Hans Genberg & Sushil Wadhwani, 2002. "Asset Prices in a Flexible Inflation Targeting Framework," NBER Working Papers 8970, National Bureau of Economic Research, Inc.
    2. Willem H. Buiter, 2004. "The Elusive Welfare Economics of Price Stability as a Monetary Policy Objective: Should New Keynesian Central Bankers Pursue Price Stability?," NBER Working Papers 10848, National Bureau of Economic Research, Inc.
    3. Olivier Blanchard & Jordi Galí, 2007. "Real Wage Rigidities and the New Keynesian Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(s1), pages 35-65, February.
    4. Boris Hofmann & Cristina Manea & Benoit Mojon, 2024. "Targeted Taylor rules: monetary policy responses to demand- and supply-driven inflation," BIS Quarterly Review, Bank for International Settlements, December.
    5. Ehrmann, Michael, 2021. "Point targets, tolerance bands or target ranges? Inflation target types and the anchoring of inflation expectations," Journal of International Economics, Elsevier, vol. 132(C).
    6. Claudio Borio, 2024. "Whither inflation targeting as a global monetary standard?," BIS Working Papers 1230, Bank for International Settlements.
    7. Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 97-116, Spring.
    8. Michael Woodford, 2012. "Inflation Targeting and Financial Stability," NBER Working Papers 17967, National Bureau of Economic Research, Inc.
    9. Philip Lowe & Claudio Borio, 2002. "Asset prices, financial and monetary stability: exploring the nexus," BIS Working Papers 114, Bank for International Settlements.
    10. Davide Romelli, 2022. "The political economy of reforms in Central Bank design: evidence from a new dataset," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 37(112), pages 641-688.
    11. Lars E O Svensson, 1997. "Inflation targeting in an open economy: strict or flexible inflation targeting?," Reserve Bank of New Zealand Discussion Paper Series G97/8, Reserve Bank of New Zealand.
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    Cited by:

    1. Alberto Americo & Douglas Kiarelly Godoy de Araujo & Johannes Damp & Sjur Nilsen & Daniel Rees & Rafael Schmidt & Christian Schmieder, 2025. "Inflation cycles: evidence from international data," BIS Working Papers 1264, Bank for International Settlements.

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    More about this item

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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