United kingdom inflation targeting and the exchange rate

• 成果类型: Article
• 署名作者: Allsopp, Christopher; Kara, Amit; Nelson, Edward
• 署名单位: University of Oxford; Federal Reserve System - USA
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/j.1468-0297.2006.01098.x
• 发表日期: 2006
• 页码: F232-F244
• 关键词: optimal monetary-policy; rate pass-through; open-economy; FRAMEWORK; prices

摘要

The UK's monetary policy strategy is one of floating exchange rates and inflation forecast targeting, with the targeted measure referring to consumer prices. We consider whether it is welfare-reducing to target inflation in the CPI rather than in a narrower index and the role of the exchange rate in the transmission of monetary policy actions to CPI inflation. It is appropriate to model imports as intermediate goods rather than goods consumed directly by households. This leads to a simpler transmission mechanism of monetary policy while also offering a sustainable explanation of the weakness of the exchange rate/inflation relationship and making consumer price inflation an appropriate monetary policy target.