Inflation targeting: theory and practice

The paper describes inflation targeting, and tries to emphasize a difference between the theory and the practice. The strategy is highly demanding of information, and thus hard to implement reasonably in practice. Flexible inflation targeting doesn't fix inflation expectations. Its global application is dubious too. Inflation targeting is not suitable for transitive economies since there cannot be satisfactory long-run prediction model at the disposal of the central bank.

Keywords: monetary policy, inflation, inflation targeting, central bank