The International Monetary Fund has published a How-To Note setting out conceptual and practical guidance for central banks in emerging market and developing economies (EMDEs) on how to design inflation targets and how to review and potentially adjust them. The note frames a clearly defined inflation target, anchored in a strong commitment to price stability as the primary objective of monetary policy, as a cornerstone of successful inflation-targeting regimes. The guidance highlights challenges EMDE policymakers can face relative to advanced economies, including a more volatile economic environment and weaker institutional backdrops, and discusses how these factors shape key design choices. It covers the target level, the specific inflation measure to be targeted, the time horizon for meeting the target, and the width and interpretation of any associated target bands. It also addresses considerations for reviewing and changing target specifications, emphasizing the heightened credibility risks such processes can entail in EMDEs, and discusses special issues relevant to disinflation programs.
International Monetary Fund 2026-03-16
International Monetary Fund issues How-To Note on designing and reviewing inflation targets for emerging market and developing economies
The International Monetary Fund has released a How-To Note guiding central banks in emerging markets and developing economies on designing and reviewing inflation targets. It emphasizes the importance of a clearly defined inflation target for monetary policy and addresses challenges specific to these economies, such as volatile environments and weaker institutions. It also discusses target levels, inflation measures, time horizons, and the credibility risks of adjusting targets.