The monetary policy framework adopted by India and many other countries is correctly described as ‘flexible inflation targeting’. Most of these countries set not only an inflation target but also provide a range within which it can fluctuate. This flexibility is extremely important because it emphasizes the uncertainties against which central bank have to operate. The range implies two things. First, there can be sudden and unexpected supply shocks. This has special implication for developing economies like India where agriculture is still a significant part of the economy. Advanced countries think mostly in terms of ‘oil’ when they talk about supply shocks. In fact, some countries to avoid the impact of supply shocks look at ‘core’ inflation which excludes oil or any other item that may be subject to supply shocks. But supply shocks do have an effect not only on items directly affected but also on other components in the retail price index. This is particularly true in the case of food inflation in countries like India. On the whole, it is better to deal with headline inflation with a range than excluding certain items. The range also underlies the fact that there is always a lag between monetary policy decisions and the impact on inflation. The range thus provides flexibility in terms of the time required to bring inflation back to the desired level when it deviates. It is for this reason (Bernanke and Mishkin, The Journal of Economic Perspectives 11:97–116, 1997) argue that flexible inflation targeting is not a rule but a framework, a case of ‘constrained discretion’.

中文翻译：

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新货币政策框架：这意味着什么

印度和许多其他国家所采用的货币政策框架被正确地描述为“灵活的通胀目标制”。这些国家中的大多数不仅设定了通胀目标，而且提供了可以波动的范围。这种灵活性极为重要，因为它强调了央行必须应对的不确定性。该范围暗示两件事。首先，可能会有突然的和意外的供应冲击。这对像印度这样的发展中经济体具有特殊意义，在印度，农业仍然是经济的重要组成部分。发达国家在谈论供应冲击时，大多以“石油”来考虑。实际上，一些为避免供应冲击的国家将“核心”通货膨胀视为不包括石油或任何其他可能受到供应冲击的物品的通胀。但是，供应冲击不仅会影响直接受影响的商品，还会影响零售价格指数中的其他组成部分。在印度等国家的食品通胀中，尤其如此。总体而言，处理标题通胀的范围要比排除某些项目更好。该范围还表明，货币政策决策与对通货膨胀的影响之间总是存在时滞。因此，该范围提供了在偏离时使通货膨胀回到所需水平所需的时间的灵活性。出于这个原因（Bernanke和Mishkin，《经济观点杂志》 11：97-116，1997）认为，灵活的通货膨胀目标不是规则，而是框架，是“约束自由裁量权”的案例。