This book by a leading authority on monetary policy offers a unique view of the subject from the perspectives of both scholar and practitioner. The book discusses the changes in the conduct of monetary policy in recent years, in particular the turn to inflation targeting. It sums up -Everything You Wanted to Know about Monetary Policy Strategy, But Were Afraid to Ask,- and reflects on what we have learnt about monetary policy over the last thirty years. The book blends theory, empirical evidence, and extensive case studies of monetary policy in advanced and emerging market and transition economies. Throughout, its focus is on the following key areas : the importance of price stability and a nominal anchor fiscal and financial preconditions for achieving price stability central bank independence as an additional precondition central bank accountability the rationale for inflation targeting the optimal inflation target central bank transparency and communication the role of asset prices in monetary policy.

How did we get here? -- Fundamental issues in the conduct of monetary policy -- What should central banks do? -- The transmission mechanism and the role of asset prices in monetary policy -- The role of output stabilization in the conduct of monetary policy -- Can central bank transparency go too far? -- Is there a role for monetary aggregates in the conduct of monetary policy? -- Rethinking the role of NAIRU in monetary policy : implications of model formulation and uncertainty -- Monetary policy strategy in advanced economies -- Introduction to part II -- Central bank behavior and the strategy of monetary policy : observations from six industrialized countries -- Inflation targeting : a new framework for monetary policy? -- International experiences with different monetary policy regimes -- Why the federal reserves should adopt inflation targeting -- Monetary policy strategy in emerging market and transition economies -- Introduction to part III -- Inflation targeting in emerging market countries -- Monetary policy strategies for Latin America -- Monetary policy strategies for emerging market countries: lessons from Latin America -- Inflation targeting in transition economies : experience and prospects -- A decade of inflation targeting in the world : what do we know and what do we need to know? -- The dangers of exchange-rate pegging in emerging market countries -- The mirage of exchange-rate regimes for emerging market countries -- What have we learned? -- Introduction to part IV -- Everything you wanted to know about monetary policy strategy, but were afraid to ask.