Prospects of the Initiation of Inflation Targeting in RF

Abstract

Bank of Russia officials have recently declared the possibility of switching to the inflation targeting regime in the medium run. The article considers benefits and shortcomings of monetary policy regime as well as the economic performance of the inflation targeting countries. The authors conclude that Russia now starts meeting conditions crucial for the success of inflation targeting. In such circumstances Russian monetary authorities have an opportunity to weaken the exchange rate goal in favor of the inflation goal.

Exchange rate Pass-through in russia

“…It is evident from comparing the estimates obtained for the second sub-sample with the estimates throughout the entire period presented in Table 2 (as well as in Table 4) that the ERPT estimates are higher for the second sub-sample. 1979(Chaudri, Hakura, 2006 Period of 1995-2008 (Bitans, 2004) Period of 1995-2002(Dobrynskaya, Levando, 2005 Period of 1975-2004(Ca'Zorzi et al, 2007 Period of 1975-2004(Ca'Zorzi et al, 2007 Period of 1996-2002(Stavrev, 2003 PPI (producer price index) 1995-2008(Bitans, 2004 Period of 1995-2002 (Dobrynskaya, Levando, 2005) Food products price index 45% during one month 56% during 6 months 4.2% Period of 1995-2002 (Dobrynskaya, Levando, 2005) Non-food products price index 55% during one month 29% during 6 months 3.2% 11.5% 74.7% Period of 1995-2002 (Dobrynskaya, Levando, 2005) Period of 2003(Dobrynskaya, 2007 Data source: authors' estimates. The effect of exchange rate indicator volatility on ERPT is studied by estimating the model (3).…”