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Monetary Policy Framework of the Bank of England and the European Central Bank: Some Useful Insights

Author

Listed:
  • Vidya Mahambare

    (Cardiff Business School, Cardiff University Colum Drive, Cardiff CFIO, 3EU, UK)

  • Naveen Srinivasan

    (Cardiff Business School, Cardiff University Colum Drive, Cardiff CFIO, 3EU, UK)

Abstract

This paper compares the inflation targeting framework adopted by the European Central Bank (ECB) vis-à-vis the Bank of England (BOE) and argues that the ECB's strategy does not constitute the best international practice. The definition of price stability adopted by the ECB is ambiguous and therefore less effective as an anchor for inflation expectations. Furthermore, greater transparency would make the ECB more accountable, while also improving stabilisation properties of monetary policy. Thus, the success of inflation targeting depends on operational details, such as how the central bank's objectives are defined and communicated to the public.

Suggested Citation

  • Vidya Mahambare & Naveen Srinivasan, 2004. "Monetary Policy Framework of the Bank of England and the European Central Bank: Some Useful Insights," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 39(2), pages 371-381, July.
    • Handle: RePEc:dse:indecr:v:39:y:2004:i:2:p:371-381
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    More about this item

    Keywords

    Monetary Policy; Price Stability; Transparency;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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