This article, firstly written in French, was published in aMoroccan Journal "LE SOIR ECHOS", n° 254February 13
th
, 2009
Dr. Kamal El-OUALY
EconomistKamal.eloualy@yahoo.fr
Inflation targeting in acontext of crisis (*)
During these fifteen last years, thetheory of the monetary policy
underwent arecasting of its
old concepts in particular withthe appearance of new
rules
dictated by theemergence of a new consensus of monetarypolicy centered on the direct inflation targetingas a new monetary policy strategy. Thisapproach, primarily founded on the forecast ofinflation, acts as a process in which theinstrument of the monetary policy is adjusted tokeep the inflation anticipated on its targetlevel. The target of inflation control isconsidered as a framework that offer moreeconomic and financial judicious decision andtend to increase the transparency and thecredibility of the monetary policy. By makinginflation as a principal objective, this newframework of monetary policy constitutes analternative anchor to the other forms of nominalanchoring, such as the exchange rate targetand the monetary aggregate target, whichappeared increasingly difficult to implement.In addition, the inflation-targetingregime cannot be implemented without therespect of some institutional and technicalprerequisites. The experiment of severalcountries also teaches us that a certain numberof challenges deserve to be noted beforechoosing to practice this monetary policyframework definitively.On the practical level, this revival of themonetary policy regime seems to constitute aworld tendency during the last decade inparticular with the adhesion of a significantnumber of emerging countries to the group ofthe developed countries, which have chosen theinflation targeting since the beginning of 1990.However, this quasi-unanimous reference to thesame mode for the control of the monetarypolicy pleads for research about the practicalscope of inflation targeting in a turbulent worldeconomic context. Which lesson at least couldwe draw from its implementation until thebursting of the financial crisis in 2008 and itseconomic repercussions, which are announcednegative during 2009 ?At the beginning, the inflation-targetingregime was implemented during a periodmarked by a fall of inflation. However, inorder to reveal its efficiency; this monetarypolicy strategy should be practiced in a moreturbulent context. It is important to show thatduring the period 2007-2008, this newmonetary consensus centered on the inflationanchoring failed in two successive periods:-
The first period
marked by the resurgence ofinflation throughout the world, in particular withthe rise of the energy prices and othercommodity prices. After more than one decadeof absence, inflationary uncertainties madetheir great return, which make pressure on thechain domestic price via the pass througheffect. The weak inflation observed up to 2007was mainly due to the weakness of the oilprices related to the low costs of labor in theemerging countries. However, as soon as theprices of oil and those of the food prices haveincreased, the virtuous circle of the weakinflation of the nineties yields place
to aresurgence of the inflation, which woulddestabilize the growth, in particular with thepropagation of the rise of food and energyprices on the other prices categories ofconsumption. Initially, the energy pricesintensified between 2003 to 2007 in particularduring the first half of 2008. This rise of the oilprices is the result of an regular increase indemand since 2000, consequence of a strongeconomic growth, in particular of theindustrialized nations of Asia. It’s alsoexacerbated by the depreciation of the dollarvalue compared to the euro.
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