Tobias Adrian, Douglas Laxton, and Maurice Obstfeld
How should a country implement Inflation-forecast targeting for monetary policy? This excerpt presents the Overview from "Advancing the Frontiers of Monetary Policy." The book explores basic principles and practices. A central theme is that managing expectations is essential for achieving the inflation target and for effectively managing short-term policy trade-offs. The book outlines efficient operational procedures, central bank communications, financial stability issues, and the importance of incorporating financial conditions in inflation-forecast targeting. It also reviews the experiences of Canada, the Czech Republic, India, and the United States. The analysis argues for assertive policies and maximum transparency, especially when long-term expectations tilt toward high inflation or deflation.