TRANSITION TO INFLATION TARGETING IN UKRAINE: NEW TOOLS FOR MONETARY POLICY

Abstract

Positive experience of inflation targeting in many countries influenced the decision to implement this framework in Ukraine. Authors consider the appropriateness of retaining inflation target under conditions of deteriorating currency market. Uncertainty of forecasts is aggravated by fragile impact of monetary policy on Ukrainian economy in conditions of growing nonlinearity of macroeconomic processes. The authors suggest the possibility of using two channels of transmission mechanism, namely, exchange rate and interest rate, and recommend additional tools to specify targets of monetary policy for the National Bank of Ukraine.

Keywords

• central banks
• inflation targeting
• monetary policy
• monetary conditions index
• monetary instruments