Inflation Targeting-A Cross Country Analysis

Monetary policy is concerned with the measures taken to regulate the supply of money, the cost and availability of credit in the economy. The primary role of the central banks is monetary stability, that is, to sustain confidence in the value of the country's money. Ultimately, this means low and stable expectations of inflation. Because increase in money supply, increases the level of inflation. So, one of the important objectives of monetary policy is to ensure price stability. In the past years, a number of monetary authorities have made strong policy declarations that give increased emphasis to inflation control. With this background the study intends to examine the macroeconomic performance of countries which have adopted Inflation Targeting (IT). The study is based on secondary data and has been collected from the RBI, World Bank and IMF reports. The results of the study have some policy implications.