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Inflation Targeting and Interest Rate Dynamics in the Euro

Author

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  • Anika Petkova

    (University of National and World Economy, Sofia, Bulgaria)

Abstract

Inflation targeting is a key component of monetary policy for most countries around the world, as the main task of central banks is the pursuit of price stability. Maintaining a certain target rate of inflation turns out to be a difficult task in the conditions of numerous external shocks and the relatively quick transition from unconventional to conventional monetary policy. The European Central Bank, as well as the Fed and other central banks, initiate increases in their key interest rates in response to resource price dynamics in global markets. The observed rise in the general price level has its impact on interest rates, which is projected on macroeconomic activity, incl. the level of domestic investment, household consumption, real GDP and other key variables.

Suggested Citation

  • Anika Petkova, 2024. "Inflation Targeting and Interest Rate Dynamics in the Euro," Nauchni trudove, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 77-88, June.
    • Handle: RePEc:nwe:natrud:y:2024:i:2:p:77-88
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    File URL: https://unwe-research-papers.org/bg/journalissues/article/11563
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    More about this item

    Keywords

    inflation targeting; monetary policy; economic shock; interest rates; real GDP;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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