Abstract:

The emergence of inflation targeting over the !ast ten years has been one of the important developments in the approach of central bank to the conduct of monetary policy. A number of industrial countries and emerging economies adopted inflation targeting as response to the difficulties they had encountered in conducting their monetary policy using an exchange rate peg or some monetary aggregate as the main intermadiate target.  This study outlines some priorities of inflation targeting regime. The experiece of inflation targeting suggestes that this policy requries a strong fiscal posıtıon; macroeconomic stability; central bank instrument independence; a well knowledge for transmission mechanism between monetary policy and inflation; and transparency of monetary policy to develop accountability and credibility of central bank.  Developing countries have more specific problems to design and implement inflation targeting than industrial countries. Difficulties that are arised from are higher inflation, higher exchange rate and indexation mechanism of inflation to past inflation, lack of central bank instrument independence. These poblems caused to be difficult to predict and control future inflation, and deviate form inflation targets. Consequently, it is, therefore, proposed that inflation targeting should be gradually conducted after initial success in lowering inflation. 

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