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Since the 1990s a large number of industrial countries and a growing number of emerging market and transition economies have adopted inflation targeting. During the process of implementation, emerging markets and especially transition economies face many challenges. Nevertheless, the list of inflation targeting countries is really never final. On the other hand, there are not too many transition economies that have adopted this monetary policy strategy. Such examples in the SEE region are Serbia and Albania. However, there is no fixed pattern and thus countries must learn along the way from one another, and more importantly, from their own experience. This paper provides an overview on inflation targeting as a monetary policy strategy, the necessary preconditions for its successful implementation, its advantages and disadvantages, issues and challenges that emerging markets and transition economies face, while defining, and during the implementation of this monetary policy strategy.

Inflation targeting as a monetary policy strategy (applicable in non EU transition economies)