The Journey to Inflation Targeting : Easier Said than Done The Case for Transitional Arrangements along the Road

Countries with evolving monetary regimes that decide to embark on "the Journey toinflation targeting" may not be able to adopt a full-fledged inflation targeting regimeimmediately. Those countries would be better off adopting transitional arrangementsthat take advantage of the informational content of monetary aggregates, developing aneconomic analysis capacity, and concentrating on monetay operations aimed at steeringmoney market interest rates. This approach would allow the central bank to buy timefor developing the building blocks for effective monetary policy, support transparentcentral bank communication, and limit the potential for undesirable outcomes along theroad.