#2006-030A "U.K. Inflation Targeting and the Exchange Rate"
by Christopher Allsopp, Amit Kara, and Edward Nelson
May 2006

The United Kingdom’s monetary policy strategy is one of floating exchange rates and inflation forecast targeting, with the targeted measure referring to consumer prices. We consider whether it is welfare-reducing to target inflation in the CPI rather than in a narrower index; and the role of the exchange rate in the transmission of monetary policy actions to CPI inflation. More...

PUBLISHED: Economic Journal, June 2006, 116(512), pp. F232-44