Inflation Targeting: International Experience And The Feasibility In China

As a response to inflation, a brand-new monetary policy framework----nflation targeting, has been adopted by more than 40 countries in the past two decades. On the basis of theory of inflation targeting, this paper analyzes practice situations of inflation targeting in New Zealand, the United Kingdom and Chile. International experience indicates that inflation targeting has played an active role in reducing inflation expectation and inflation level, enhancing the transparency and credibility of monetary policy etc.. Finally, the paper discusses the feasibility of implementing inflation targeting in China. Through empirical study on China's actual data, this paper argues that there are some difficulties in the implementation of inflation targeting in China, but with the improvement of the environment and conditions, inflation targeting will be the logical choice for China's monetary policy.