Inflation Targeting And The Intermediate Target Of Monetary Policy Choice

Intermediate aims are the meeting and transmission point of central bank monetary policy, which generate influencing about magnificent economy under market economy. Choose and revise intermediate aims are one of pivotal steps in monetary police.Before the 1960's, because of the influence of Keyensianism , most of developed countries choosed the interest rate as intermediate aims. In 1970's, because of stagnation and the influence of Fledman school, these country turned their intermediate aims from interest rate to money supply.After the 1980's, because of finance innovation and the use of financial derivative product, money base was out of control and money multiplier and money velocity changed unstable. So the correlation between money supply and ultimate aims of money policy decreased. It is necessary to find another appropriate intermediate aim. In 1990's, a number of countries had instituted inflation targeting, such as New Zealand and United Kingdom.This paper at first analyzes the model of inflation targeting, including simple model and complex model. Then the writer compares the inflation targeting and other intermediate aims. In the last of the paper, the writer analyzes the feasibility of implementing inflation targeting in our country.