Capital inflows have played an important role in promoting growth in many developing and transitional economies. Yet they have also been associated with volatility in variables that central banks use as targets of monetary policy, such as monetary growth, the exchange rate and inflation. This...

The key aim of monetary policy for most central banks is to keep inflation low and steady. However in a market-oriented economy, central banks cannot control inflation directly. They have to use instruments such as interest rates, the effects of which on the economy are uncertain. And they have...

Monetary operations typically aim to achieve monetary stability; but, under this broad umbrella, the monetary authorities need to decide which specific targets to aim at, and which policy instruments should be used. For most countries the final long-term monetary target of the central bank is...