Inflation targeting has emerged as a predominant monetary policy strategy for central banks globally, providing a robust framework for achieving and maintaining price stability. Unlike past regimes that focused on monetary aggregates or exchange rates, this approach centers on a clear, publicly announced inflation target, which enhances central bank accountability and transparency. By providing a credible nominal anchor, inflation targeting helps to ground the public’s expectations for future price changes, which in turn influences wage and price-setting behavior and helps to stabilize the economy.

This program provides a comprehensive and practical deep dive into the theory, design, and operational implementation of inflation targeting frameworks. Participants will gain a fundamental understanding of how central banks set targets, choose policy instruments, and communicate their decisions to the public and markets. The course will address both the benefits of the framework—such as its ability to enhance credibility and provide flexibility—as well as the key challenges, including navigating supply shocks and the complexities of implementation in developing economies. By focusing on real-world case studies and the latest research, attendees will be equipped to tackle the practical complexities of this crucial monetary policy framework.

Duration: 10 days

Target Audience:

• Central Bank Monetary Policy Committee Members
• Central Bank Economists and Researchers
• Financial Regulators and Supervisors
• Treasury and Ministry of Finance Officials
• Financial Market Analysts and Traders
• Graduate Students in Economics and Finance
• International Development Professionals
• Banking and Risk Management Professionals
• Corporate Strategy and Planning Staff
• Journalists and Economic Reporters

Objectives:

• Master the core principles and theoretical foundations of inflation targeting.
• Learn how to design a credible and effective inflation target.
• Understand the operational framework and instruments for implementing policy.
• Grasp the complexities of central bank communication and transparency.
• Develop proficiency in modeling and forecasting inflation.
• Explore best practices for building central bank credibility and independence.
• Learn about robust approaches to managing supply shocks.
• Identify the critical challenges of implementing the framework in diverse economies.
• Develop skills in evaluating the effectiveness of a monetary policy regime.
• Formulate strategies for the future of inflation targeting.

Course Modules:

Module 1: Foundations of Price Stability

• The history of monetary policy objectives
• The economic costs and benefits of inflation
• The concept of a nominal anchor
• The debate between price level and inflation targeting
• The benefits of price stability for long-term growth

Module 2: The Core Elements of Inflation Targeting

• The public announcement of a numerical target
• The role of a medium-term time horizon
• The importance of a "risk and mitigation" plan
• The use of a clear and credible communication strategy
• The legal mandate for central bank independence

Module 3: The New Keynesian Framework

• The theory of the New Keynesian Phillips Curve
• The role of a "data story map"
• The use of a simple scorecard and a dashboard
• The importance of a "clear and consistent reporting style"
• The relationship between inflation, output, and the policy rate

Module 4: Designing the Inflation Target

• Choosing the appropriate price index (e.g., CPI, PCE)
• Setting a point target vs. a target band
• The importance of a "clear and focused research question"
• The role of a clear and compelling KPI
• The role of a symmetrical vs. asymmetrical target

Module 5: The Monetary Policy Toolkit

• The role of the policy interest rate
• The use of open market operations
• The importance of a "stakeholder analysis"
• The role of reserve requirements and other tools
• The challenges of the zero lower bound

Module 6: Monetary Policy Communication

• The importance of a "program's theory of change"
• The role of press conferences and inflation reports
• The use of forward guidance to anchor expectations
• The benefits of transparency for central bank credibility
• The challenges of communicating in times of uncertainty

Module 7: Forecasting and Modeling for IT

• The role of the inflation forecast as an intermediate target
• The use of Phillips curves and other forecasting models
• The importance of a "clear and compelling KPI"
• The role of a "risk and mitigation" plan
• Evaluating forecast accuracy and model limitations

Module 8: Central Bank Credibility

• The link between credibility and anchored expectations
• The importance of a "clear and focused research question"
• The role of institutional independence
• The benefits of a consistent and predictable policy
• The impact of policy actions on public trust

Module 9: Challenges in Advanced Economies

• The zero lower bound and unconventional policies (QE)
• The role of a "data story map"
• The trade-off between price stability and financial stability
• The impact of aging demographics on inflation
• The challenges of managing fiscal dominance

Module 10: Implementing IT in Developing Economies

• The prerequisites for a successful framework
• The importance of a simple scorecard and a dashboard
• The role of a high degree of exchange rate pass-through
• The challenges of shallow financial markets
• The importance of a "clear and consistent reporting style"

Module 11: The Role of Financial Stability

• The interplay between monetary policy and financial stability
• The importance of a "program's theory of change"
• The use of macroprudential tools
• The risk of asset bubbles and credit booms
• The role of a "stakeholder analysis"

Module 12: IT and the Global Economy

• The impact of global shocks on domestic inflation
• The role of a clear and compelling KPI
• The use of a "risk and mitigation" plan
• The coordination of monetary policies across countries
• The challenges of a globalized economy

Module 13: Policy Rules vs. Discretion

• The debate between rules and discretion
• The benefits and drawbacks of policy rules (e.g., Taylor Rule)
• The role of a "data story map"
• The concept of constrained discretion
• The role of a simple scorecard and a dashboard

Module 14: Case Studies

• Case study: The implementation of IT in New Zealand
• Case study: The experience of IT in Brazil or Chile
• Case study: The challenges of the ECB's strategy
• Lessons learned from global experiences
• The importance of a "clear and focused research question"

Module 15: The Future of Inflation Targeting

• The role of big data and machine learning in forecasting
• The role of a "clear and consistent reporting style"
• The use of central bank digital currencies (CBDCs)
• The future of inflation targets
• The role of a "program's theory of change"

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 10 working days before commencement of the training.