Appendix Table II.1: Nominal Anchors – Pros and Cons Anchor … · 2014. 1. 27. · anchors...
40
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework 83 Anchor Advantages Disadvantages Monetary targeting Some monetary aggregates can be quickly and easily controlled by the central bank. Depends on a well-defined and stable relationship between monetary aggregates and nominal income. With financial innovations, this stability often breaks down. Monetary aggregates can be accurately measured (with short lags). Greater stress on making policy transparent (clear, simple and understandable) and on regular communication with the public may undermine credibility in the face deviations. Increases the transparency of monetary policy, thereby avoiding the time- inconsistency trap. Nominal income targeting It could be superior to monetary targeting, since it avoids the problem of velocity shocks and time inconsistency. Compels a central bank to announce a potential GDP growth number, over which it has limited control. Allows a country to maintain independent monetary policy. Concept of nominal GDP is not clearly understood by the public, lowering transparency. Could engender time inconsistency if the central bank announces too low or too high a number, which subsequently is found to be different from the announced one. Exchange rate targeting The nominal anchor of the exchange rate fixes the inflation rate for internationally traded goods and thus, contributes directly to keeping inflation in check. The central bank has limited control over its monetary policy. If the exchange rate target is credible, it anchors inflation expectations to the inflation rate in the anchor country to whose currency it is pegged. The country becomes vulnerable to shocks emanating from the country to which its currency is pegged. Has the advantage of simplicity and clarity; well understood by the public. Speculative attacks on the exchange rate might force the central bank to substantially raise its interest rates, with significant economic costs. Inflation targeting Preserves independence of monetary policy. Too much focus on inflation often at the cost of output stabilisation. Provides a nominal anchor for the path of price level. Long and variable lags in monetary transmission means that a substantial amount of time must elapse before the success of monetary policy can be ascertained. (Contd...) Appendix Table II.1: Nominal Anchors – Pros and Cons
Transcript of Appendix Table II.1: Nominal Anchors – Pros and Cons Anchor … · 2014. 1. 27. · anchors...
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
83
Anchor Advantages Disadvantages
Monetary targeting
Some monetary aggregates can be quickly and easily controlled by the central bank.
Depends on a well-defi ned and stable relationship between monetary aggregates and nominal income. With fi nancial innovations, this stability often breaks down.
Monetary aggregates can be accurately measured (with short lags).
Greater stress on making policy transparent (clear, simple and understandable) and on regular communication with the public may undermine credibility in the face deviations.
Increases the transparency of monetary policy, thereby avoiding the t ime-inconsistency trap.
Nominal income targeting
It could be superior to monetary targeting, since it avoids the problem of velocity shocks and time inconsistency.
Compels a central bank to announce a potential GDP growth number, over which it has limited control.
Allows a country to maintain independent monetary policy.
Concept of nominal GDP is not clearly understood by the public, lowering transparency.
Could engender time inconsistency if the central bank announces too low or too high a number, which subsequently is found to be different from the announced one.
Exchange rate targeting
The nominal anchor of the exchange rate fi xes the infl ation rate for internationally traded goods and thus, contributes directly to keeping infl ation in check.
The central bank has limited control over its monetary policy.
If the exchange rate target is credible, it anchors inflation expectations to the infl ation rate in the anchor country to whose currency it is pegged.
The country becomes vulnerable to shocks emanating from the country to which its currency is pegged.
Has the advantage of simplicity and clarity; well understood by the public.
Speculative attacks on the exchange rate might force the central bank to substantially raise its interest rates, with signifi cant economic costs.
Infl ation targeting
Preserves independence of monetary policy. Too much focus on infl ation often at the cost of output stabilisation.
Provides a nominal anchor for the path of price level.
Long and variable lags in monetary transmission means that a substantial amount of time must elapse before the success of monetary policy can be ascertained.
(Contd...)
Appendix Table II.1: Nominal Anchors – Pros and Cons
84
Appendix Tables
Anchor Advantages Disadvantages
Clear and simple; hence, well-understood by the public.
Effi cacy could be compromised if interest rates hit a zero lower bound.
Transparency increases the potential for promoting low infl ation expectations, which helps to produce a desirable inflation outcome.
A rigid rule does not allow enough headroom (discretion) to respond fl exibly to unforeseen contingencies.
Price level targeting
Lowers uncertainty about prices that would prevail in the near future.
Poses communication challenges. Under this approach, the central bank, at a minimum, needs to specify both an intercept (level of target in the base period) and a slope (rate of increase in target price path over time), over and above a time period.
Allows economic agents to form forward-looking expectations, based on current price levels.
Not practical experience on the success or failure of its implementation across countries in modern times1.
Can prove effective when nominal interest rates hit the zero lower bound.
The transition costs of moving to this practice (for countries already on infl ation targeting) could be large and uncertain.
Just-do-it strategy
Constructive ambiguity in policy making often helps central bank achieve its long-term goal (price stability).
Non transparent; not clear to the public what the central bank intends to do (or, is doing).
Demonstrated success. Strongly dependent on skills and preferences of individuals in charge of the central bank.
1 In 1931, Sweden went off the gold standard and adopted a price-level target in order to counter defl ationary pressures associated with the Great Depression (C. Berg and L. Jonung, 1999. Pioneering Price Level Targeting: The Swedish Experience 1931-1937, Journal of Monetary Economics 43, 525-51).
Appendix Table II.1: Nominal Anchors – Pros and Cons (Concld.)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
85
Cou
ntry
Sinc
e w
hen
Prev
ious
/ w
hy
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/goa
l in
depe
nden
ce
Targ
et
indi
cato
r, t
ime
fram
e an
d st
yle
Freq
uenc
y of
M
eeti
ngK
ey p
olic
y ra
te
/ Ope
rati
onal
ta
rget
/ in
stru
men
tal
inde
pend
ence
Any
oth
er c
omm
ents
Aust
ralia
1993
Non
e/Pr
ovid
e a
new
mon
etar
y an
chor
Rese
rve
Bank
Bo
ard
in
agre
emen
t w
ith
Gov
erno
r an
d th
e M
inis
ter
of
Fina
nce
(Tre
asur
er)
Targ
et r
ange
of
2-3
per
cent
in
fl ati
on o
n av
erag
e ov
er
the
econ
omic
cy
cle.
Med
ium
ter
m
Nor
mal
ly m
eets
11
tim
es e
ach
year
, on
the
fi rst
Tue
sday
of
each
mon
th (n
o m
eeti
ng in
Ja
nuar
y)
Targ
et c
ash
rate
/I
nter
bank
cas
h ra
te
In d
eter
min
ing
mon
etar
y po
licy,
the
Ban
k ha
s a
duty
to
mai
ntai
n pr
ice
stab
ility
, ful
l em
ploy
men
t, a
nd t
he
econ
omic
pro
sper
ity
and
wel
fare
of
the
Aust
ralia
n pe
ople
.
Can
ada
1990
- 19
91N
one/
Prov
ide
a ne
w m
onet
ary
anch
or a
nd
brin
g do
wn
infl a
tion
The
infl a
tion
ta
rget
s ar
e ag
reed
join
tly
by t
he
Gov
ernm
ent
of
Can
ada
and
the
Bank
of
Can
ada
A t
arge
t ra
te f
or
tota
l CPI
of
2 pe
r ce
nt o
n a
12-m
onth
bas
is,
wit
h a
1-3
per
cent
con
trol
ra
nge.
The
cu
rren
t ta
rget
ra
nge
exte
nds
to D
ecem
ber
2016
In la
te 2
000,
th
e Ba
nk o
f C
anad
a ad
opte
d a
syst
em o
f ei
ght
pre-
set
date
s pe
r ye
ar
on w
hich
it
anno
unce
s it
s ke
y po
licy
rate
.
The
Bank
ca
rrie
s ou
t m
onet
ary
polic
y by
in
fl uen
cing
sh
ort-t
erm
in
tere
st r
ates
. It
does
thi
s by
ra
isin
g an
d lo
wer
ing
the
targ
et f
or t
he
over
nigh
t ra
te.
The
Ban
k al
so m
onit
ors
a se
t of
“co
re”
infl a
tion
m
easu
res,
incl
udin
g th
e C
PIX
, whi
ch s
trip
s ou
t ei
ght
of t
he m
ost
vola
tile
C
PI c
ompo
nent
s. T
hese
“c
ore”
mea
sure
s al
low
th
e Ba
nk t
o “l
ook
thro
ugh”
tem
pora
ry
chan
ges
in t
otal
CPI
in
fl ati
on a
nd t
o fo
cus
on
the
unde
rlyi
ng t
rend
of
infl a
tion
, whi
ch is
a g
ood
indi
cato
r of
whe
re t
otal
C
PI in
fl ati
on is
hea
ded
in
the
abse
nce
of p
olic
y ac
tion
.
App
endi
x Ta
ble
II.2
A: I
nfl a
tion
Tar
geti
ng C
ount
ries
– A
dvan
ced
Econ
omie
s
(Con
td...
)
86
Appendix Tables
Cou
ntry
Sinc
e w
hen
Prev
ious
/ w
hy
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/goa
l in
depe
nden
ce
Targ
et
indi
cato
r, t
ime
fram
e an
d st
yle
Freq
uenc
y of
M
eeti
ngK
ey p
olic
y ra
te
/ Ope
rati
onal
ta
rget
/ in
stru
men
tal
inde
pend
ence
Any
oth
er c
omm
ents
Japa
nJa
nuar
y 20
13Th
e A
ct s
tate
s,
"The
Ban
k of
Ja
pan'
s au
tono
my
rega
rdin
g cu
rren
cy a
nd
mon
etar
y co
ntro
l sha
ll be
re
spec
ted.
" su
ffi c
ient
ly."
Pric
e st
abili
ty
targ
et o
f 2
per
cent
in t
erm
s of
th
e ye
ar-o
n-ye
ar r
ate
of
chan
ge in
the
C
PI a
t th
e ea
rlie
st
poss
ible
tim
e,
wit
h a
tim
e ho
rizo
n of
ab
out
two
year
s.
Mon
etar
y Po
licy
Mee
ting
s (M
PMs)
are
he
ld o
nce
or
twic
e a
mon
th,
for
one
or t
wo
days
. D
iscl
osur
e vi
a pr
ess
rele
ases
, m
inut
es o
f th
e m
eeti
ngs,
pre
ss
conf
eren
ce.
The
Bank
co
ntro
ls t
he
amou
nt o
f fu
nds
in t
he
mon
ey m
arke
t,
mai
nly
thro
ugh
mon
ey m
arke
t op
erat
ions
.
The
Bank
sup
plie
s fu
nds
to fi
nanc
ial i
nsti
tuti
ons
by, f
or e
xam
ple,
ex
tend
ing
loan
s to
the
m,
whi
ch a
re b
acke
d by
co
llate
ral s
ubm
itte
d to
th
e Ba
nk b
y th
ese
inst
itut
ions
. Suc
h an
op
erat
ion
is c
alle
d a
fund
s-su
pply
ing
oper
atio
n.
New
Ze
alan
d19
89-9
0N
one/
Part
of
exte
nsiv
e re
form
s,
diss
atis
fact
ion
wit
h ea
rlie
r ou
tcom
es;
prov
ide
a ne
w
nom
inal
anc
hor
The
Min
iste
r of
Fi
nanc
e an
d th
e G
over
nor
of
the
Rese
rve
Bank
sha
ll to
geth
er h
ave
a se
para
te
agre
emen
t se
ttin
g ou
t sp
ecifi
c ta
rget
s fo
r ac
hiev
ing
and
The
curr
ent
agre
emen
t,
sign
ed in
Se
ptem
ber
2012
, cal
ls f
or
infl a
tion
to
be
kept
wit
hin
1 to
3 p
erce
nt a
ye
ar, o
n av
erag
e ov
er
the
med
ium
te
rm, w
ith
a
Eigh
t sch
edul
ed
deci
sion
m
akin
g m
eeti
ngs
in a
ye
ar.
Offi
cia
l cas
h ra
te (O
CR)
- the
w
hole
sale
pri
ce
of b
orro
wed
m
oney
.
The
Rese
rve
Bank
pu
blis
hes
its
Mon
etar
y Po
licy
Stat
emen
t (M
PS)
quar
terl
y. E
ach
Mon
etar
y Po
licy
Stat
emen
t m
ust
set
out:
1) h
ow t
he R
eser
ve
Bank
pro
pose
s to
ach
ieve
it
s ta
rget
s; 2
) how
it
prop
oses
to
form
ulat
e an
d im
plem
ent
mon
etar
y po
licy
duri
ng t
he n
ext
fi ve
year
s; a
nd 3
) how
App
endi
x Ta
ble
II.2
A: I
nfl a
tion
Tar
geti
ng C
ount
ries
– A
dvan
ced
Econ
omie
s (C
ontd
.)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
87
Cou
ntry
Sinc
e w
hen
Prev
ious
/ w
hy
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/goa
l in
depe
nden
ce
Targ
et
indi
cato
r, t
ime
fram
e an
d st
yle
Freq
uenc
y of
M
eeti
ngK
ey p
olic
y ra
te
/ Ope
rati
onal
ta
rget
/ in
stru
men
tal
inde
pend
ence
Any
oth
er c
omm
ents
mai
ntai
ning
pr
ice
stab
ility
. Th
is is
kno
wn
as t
he P
olic
y Ta
rget
s A
gree
men
t (P
TA).
focu
s on
ke
epin
g fu
ture
av
erag
e in
fl ati
on n
ear
the
2 pe
rcen
t ta
rget
m
idpo
int.
The
Re
serv
e Ba
nk
has
publ
ishe
d an
inte
ract
ive
infl a
tion
ca
lcul
ator
on
its
web
site
,
mon
etar
y po
licy
has
been
im
plem
ente
d si
nce
the
last
Mon
etar
y Po
licy
Stat
emen
t.
Nor
way
2001
Exch
ange
rat
e /
grad
ual
mov
emen
t to
war
ds fl
exib
le
exch
ange
rat
e an
d st
rong
er
emph
asis
on
pric
e st
abili
ty
The
Gov
ernm
ent
has
set
an
infl a
tion
tar
get
for
mon
etar
y po
licy.
The
op
erat
iona
l ta
rget
of
mon
etar
y po
licy
shal
l be
annu
al
cons
umer
pri
ce
infl a
tion
of
clos
e to
2.5
per
ce
nt o
ver
tim
e.
The
Exe
cuti
ve
Boar
d se
ts t
he
key
rate
at
pre-
anno
unce
d ti
mes
, nor
mal
ly
six
tim
es a
ye
ar.
Key
pol
icy
rate
, w
hich
is t
he
inte
rest
rat
e on
ba
nks'
dep
osit
s in
Nor
ges
Bank
.
The
Nor
ges
Bank
’s f
ocus
is
on
pric
e st
abili
ty,
fi nan
cial
sta
bilit
y an
d ge
nera
ting
add
ed v
alue
th
roug
h in
vest
men
t m
anag
emen
t.
App
endi
x Ta
ble
II.2
A: I
nfl a
tion
Tar
geti
ng C
ount
ries
– A
dvan
ced
Econ
omie
s (C
ontd
.)
88
Appendix Tables
Cou
ntry
Sinc
e w
hen
Prev
ious
/ w
hy
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/goa
l in
depe
nden
ce
Targ
et
indi
cato
r, t
ime
fram
e an
d st
yle
Freq
uenc
y of
M
eeti
ngK
ey p
olic
y ra
te
/ Ope
rati
onal
ta
rget
/ in
stru
men
tal
inde
pend
ence
Any
oth
er c
omm
ents
Swed
enAn
noun
ced
in
Janu
ary
1993
, ad
opte
d in
199
5
Exch
ange
rat
e /
Forc
ed o
ff a
fi x
ed e
xcha
nge
rate
reg
ime
The
Exec
utiv
e Bo
ard
of t
he
Riks
bank
m
akes
the
m
onet
ary
polic
y de
cisi
ons
wit
hout
in
stru
ctio
n fr
om a
ny o
ther
pa
rtie
s.
2 pe
r ce
nt
targ
et in
ann
ual
chan
ge in
he
adlin
e C
PI
The
Exec
utiv
e Bo
ard
hold
s si
x sc
hedu
led
mon
etar
y po
licy
mee
ting
s a
year
.
Ove
rnig
ht r
epo
rate
/
Ove
rnig
ht r
epo
rate
tar
get
The
Riks
bank
’s f
unct
ion
is t
o ke
ep in
fl ati
on c
lose
to
the
goa
l of
2 pe
r ce
nt.
If t
he c
redi
bilit
y of
thi
s in
fl ati
on t
arge
t is
not
th
reat
ened
, the
Rik
sban
k ca
n m
ake
furt
her
cont
ribu
tion
s to
red
ucin
g va
riat
ions
in a
reas
suc
h as
pro
duct
ion
and
empl
oym
ent
- the
'rea
l ec
onom
y’.
Sout
h K
orea
Apr
il 19
98Ba
sed
on B
ank
of K
orea
Act
, it
sets
the
mid
-te
rm in
fl ati
on
targ
et t
o be
ap
plie
d fo
r th
ree
year
s in
co
nsul
tati
on
wit
h th
e go
vern
men
t.
The
infl a
tion
ta
rget
mea
sure
du
ring
the
pe
riod
fro
m
2013
to
2015
is
set
at
2.5~
3.5%
, ba
sed
on c
onsu
mer
pr
ice
infl a
tion
(yea
r-on
-yea
r).
The
Base
Rat
e,
the
BOK
's
polic
y ra
te, i
s se
t du
ring
the
'm
ain
mee
ting
' of
the
M
onet
ary
Polic
y C
omm
itte
e th
at
take
s pl
ace
once
eve
ry
mon
th.
The
Bank
of
Kor
ea B
ase
Rat
e is
the
ref
eren
ce
polic
y ra
te.
In a
ddit
ion,
the
Ban
k of
K
orea
als
o gi
ves
expl
anat
ion
to t
he
gene
ral p
ublic
as
to t
he
stat
us o
f th
e m
ediu
m
term
infl a
tion
tar
get
by
mon
itor
ing
it o
n an
an
nual
bas
is.
App
endi
x Ta
ble
II.2
A: I
nfl a
tion
Tar
geti
ng C
ount
ries
– A
dvan
ced
Econ
omie
s (C
ontd
.)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
89
Cou
ntry
Sinc
e w
hen
Prev
ious
/ w
hy
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/goa
l in
depe
nden
ce
Targ
et
indi
cato
r, t
ime
fram
e an
d st
yle
Freq
uenc
y of
M
eeti
ngK
ey p
olic
y ra
te
/ Ope
rati
onal
ta
rget
/ in
stru
men
tal
inde
pend
ence
Any
oth
er c
omm
ents
UK
Oct
ober
19
92Ex
chan
ge r
ate
Infl a
tion
ta
rget
ing
Forc
ed o
ff a
fi x
ed e
xcha
nge
rate
reg
ime
to
mai
ntai
n pr
ice
stab
ility
/
Pri
ce s
tabi
lity
is d
efi n
ed b
y th
e G
over
nmen
t’s
infl a
tion
tar
get
of 2
%.
The
infl a
tion
ta
rget
of
2 pe
r ce
nt is
ex
pres
sed
in
term
s of
an
annu
al r
ate
of
infl a
tion
bas
ed
on t
he
Con
sum
er
Pric
es In
dex
(CPI
).
Mon
etar
y Po
licy
Com
mit
tee
mee
ts m
onth
ly
for
a tw
o-da
y m
eeti
ng.
Dec
isio
ns a
re
mad
e by
a v
ote
of t
he
Com
mit
tee
on
a on
e-pe
rson
on
e-vo
te b
asis
.
The
1998
Ban
k of
Eng
land
Act
m
ade
the
Bank
in
depe
nden
t to
se
t in
tere
st
rate
s. B
ank
rate
is
bei
ng u
sed
sinc
e 20
09;
asse
t pu
rcha
se
as a
n ad
diti
onal
in
stru
men
t.
In A
ugus
t 20
13 t
he M
PC
prov
ided
som
e ex
plic
it
guid
ance
reg
ardi
ng t
he
futu
re c
ondu
ct o
f m
onet
ary
polic
y. T
he
MPC
inte
nds
at a
m
inim
um t
o m
aint
ain
the
pres
ent
high
ly
stim
ulat
ive
stan
ce o
f m
onet
ary
polic
y un
til
econ
omic
sla
ck h
as b
een
subs
tant
ially
red
uced
, pr
ovid
ed t
his
does
not
en
tail
mat
eria
l ris
ks t
o pr
ice
stab
ility
or
fi nan
cial
st
abili
ty.
App
endi
x Ta
ble
II.2
A: I
nfl a
tion
Tar
geti
ng C
ount
ries
– A
dvan
ced
Econ
omie
s (C
oncl
d.)
90
Appendix Tables
Cou
ntry
Sinc
e w
hen
Prev
ious
/ an
y ta
rget
oth
er
than
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/ G
oal
inde
pend
ence
Targ
et
indi
cato
r,
tim
efra
me
and
styl
e
Freq
uenc
y of
M
eeti
ngK
ey p
olic
y ra
te
/ Ope
rati
onal
ta
rget
/ In
stru
men
tal
inde
pend
ence
Any
oth
er
com
men
ts
Euro
are
aTo
mai
ntai
n pr
ice
stab
ility
is
the
pri
mar
y ob
ject
ive
of t
he
Euro
syst
em a
nd
of t
he s
ingl
e m
onet
ary
polic
y fo
r w
hich
it is
re
spon
sibl
e.
This
is la
id
dow
n in
the
Tr
eaty
on
the
Func
tion
ing
of
the
Euro
pean
U
nion
, Art
icle
12
7 (1
).
the
Gov
erni
ngC
ounc
il.
pric
e st
abili
ty
is d
efi n
ed a
s "a
yea
r-on
-yea
r in
crea
se in
the
H
arm
onis
ed
Inde
x of
C
onsu
mer
Pr
ices
(HIC
P)
for
the
euro
ar
ea o
f be
low
2
per
cent
. Pri
ce
stab
ility
is t
o be
m
aint
aine
d ov
er
the
med
ium
te
rm".
Twic
e a
mon
th,
wit
h fi r
st d
ay
disc
ussi
ng
over
all
asse
ssm
ent
of
the
econ
omic
si
tuat
ion
and
the
risk
s to
pr
ice
stab
ility
ba
sed
on a
com
preh
ensi
ve
econ
omic
and
m
onet
ary
anal
ysis
in t
he
cont
ext
of t
he
ECB’
s (t
wo-
pilla
r) m
onet
ary
polic
y st
rate
gy.
Min
imum
ra
te in
mai
n re
fi nan
cing
op
erat
ion
(MRO
) and
the
in
tere
st r
ates
on
the
mar
gina
l le
ndin
g fa
cilit
y an
d th
e de
posi
t fa
cilit
y.
The
Euro
sy
stem
cur
rent
ly
acce
pts
a ve
ry b
road
ra
nge
of d
ebt
inst
rum
ents
, is
sued
both
by
publ
ic
and
priv
ate
issu
ers.
Swit
zerl
and
The
Swis
s N
atio
nal
Bank
(SN
B)
impl
emen
ts it
s m
onet
ary
polic
y by
fi xi
ng a
tar
get
rang
e fo
r th
e th
ree-
mon
th
Art
icle
99
of
the
Fede
ral
Con
stit
utio
n en
trus
ts t
he
SNB,
as
an
inde
pend
ent
cent
ral b
ank,
w
ith
the
SNB
equa
tes
pric
e st
abili
ty
wit
h a
rise
in
the
nati
onal
co
nsum
er p
rice
in
dex
of le
ss
than
2 p
er c
ent
per
annu
m in
Qua
rter
ly
mee
ting
s (M
arch
, Jun
e,
Sept
embe
r an
d D
ecem
ber)
wit
h pr
ess
rele
ase
and
bulle
tin
publ
icat
ion.
CH
F 3-
mon
th
Libo
r.M
ediu
m-
term
infl a
tion
fo
reca
sts.
App
endi
x Ta
ble
II.2
B: N
on-i
nfl a
tion
Tar
geti
ng C
ount
ries
– A
dvan
ced
Econ
omie
s
(Con
td...
)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
91
Cou
ntry
Sinc
e w
hen
Prev
ious
/ an
y ta
rget
oth
er
than
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/ G
oal
inde
pend
ence
Targ
et
indi
cato
r,
tim
efra
me
and
styl
e
Freq
uenc
y of
M
eeti
ngK
ey p
olic
y ra
te
/ Ope
rati
onal
ta
rget
/ In
stru
men
tal
inde
pend
ence
Any
oth
er
com
men
ts
Swis
s fr
anc
Libo
r.co
nduc
t of
m
onet
ary
polic
y in
the
inte
rest
s of
the
cou
ntry
as
a w
hole
.
term
s of
tot
al
CPI
.
Sing
apor
eEa
rly
1980
sC
entr
ed o
n th
e m
anag
emen
t of
th
e ex
chan
ge
rate
.
The
exch
ange
ra
te p
olic
y ba
nd
is p
erio
dica
lly
revi
ewed
to
ensu
re t
hat
it r
emai
ns
cons
iste
nt w
ith
the
unde
rlyi
ng
fund
amen
tals
of
the
econ
omy.
The
obje
ctiv
e of
Sin
gapo
re's
ex
chan
ge r
ate
polic
y ha
s al
way
s be
en
to p
rom
ote
sust
aine
d an
d no
n-in
fl ati
onar
y gr
owth
for
th
e Si
ngap
ore
econ
omy.
Regu
lar
mon
etar
y po
licy
anno
unce
men
ts
are
sche
dule
d in
Apr
il an
d O
ctob
er.
The
trad
e-w
eigh
ted
exch
ange
rat
e is
allo
wed
to
fl uct
uate
wit
hin
a po
licy
band
, an
d w
here
ne
cess
ary,
M
onet
ary
Auth
orit
y of
Si
ngap
ore
(MA
S)
cond
ucts
dir
ect
inte
rven
tion
s in
the
for
eign
ex
chan
ge
mar
ket
to
mai
ntai
n th
e ex
chan
ge r
ate
wit
hin
this
ba
nd.
MA
S' m
onet
ary
polic
y is
ce
ntre
d on
the
m
anag
emen
t of
th
e ex
chan
ge
rate
rat
her
than
tar
geti
ng
inte
rest
rat
e le
vels
.
App
endi
x Ta
ble
II.2
B: N
on-i
nfl a
tion
Tar
geti
ng C
ount
ries
– A
dvan
ced
Econ
omie
s (C
ontd
.)
92
Appendix Tables
Cou
ntry
Sinc
e w
hen
Prev
ious
/ an
y ta
rget
oth
er
than
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/ G
oal
inde
pend
ence
Targ
et
indi
cato
r,
tim
efra
me
and
styl
e
Freq
uenc
y of
M
eeti
ngK
ey p
olic
y ra
te
/ Ope
rati
onal
ta
rget
/ In
stru
men
tal
inde
pend
ence
Any
oth
er
com
men
ts
Uni
ted
Stat
esN
o fo
rmal
ta
rget
/Th
e C
omm
itte
e ju
dges
tha
t in
fl ati
on a
t th
e ra
te o
f 2
per
cent
, as
mea
sure
d by
th
e an
nual
ch
ange
in t
he
pric
e in
dex
for
pers
onal
co
nsum
ptio
n ex
pend
itur
es, i
s m
ost
cons
iste
nt
over
the
long
er
run.
Stat
utor
y M
anda
te f
rom
th
e C
ongr
ess.
Max
imum
em
ploy
men
t,
stab
le p
rice
s,
and
mod
erat
e lo
ng-te
rm
inte
rest
rat
es.
FOM
C m
eeti
ngs
and
pres
s co
nfer
ence
.
Dec
isio
n by
co
nsen
sus/
Eig
ht s
ched
uled
pe
r ye
ar, w
ith
othe
rs a
s ne
eded
/M
eeti
ngs
may
la
st o
ne o
r tw
o da
ys.
In t
he m
ost
rece
nt
proj
ecti
ons,
FO
MC
pa
rtic
ipan
ts’
esti
mat
es o
f th
e lo
nger
-run
no
rmal
rat
e of
un
empl
oym
ent
had
a ce
ntra
l te
nden
cy o
f 5.
2-
6.0
per
cent
.
Sour
ce: B
IS M
C C
ompe
ndiu
m, P
etur
sson
(200
4), m
onth
ly b
ulle
tin,
Han
dboo
k of
Cen
tral
Ban
king
, 29,
Ban
k of
Eng
land
, dif
fere
nt c
entr
al b
ank
web
site
s ti
ll Ja
nuar
y 10
, 201
4
App
endi
x Ta
ble
II.2
B: N
on-i
nfl a
tion
Tar
geti
ng C
ount
ries
– A
dvan
ced
Econ
omie
s (C
oncl
d.)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
93
Cou
ntry
Sinc
e w
hen
Prev
ious
/ w
hy
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/op
erat
iona
l in
depe
nden
ce
Targ
et
indi
cato
r,
tim
efra
me
and
styl
e
Freq
uenc
y of
Mee
ting
Key
pol
icy
rate
Any
oth
er
com
men
tsPe
rfor
man
ce
on in
fl at
ion
Chi
leSe
ptem
ber
1999
Hig
h in
fl ati
on d
ue t
o ex
pans
iona
ry p
olic
ies,
oi
l pri
ce h
ike
duri
ng
Gul
f w
ar, f
ailu
re
wit
h ex
chan
ge r
ate
base
d st
abili
sati
on
prog
ram
me,
inst
abili
ty
of m
oney
dem
and
and
diffi
cul
ty in
mon
etar
y ta
rget
ing,
pro
vide
a
new
mon
etar
y an
chor
and
gra
dual
di
sinfl
ati
on.
Cen
tral
ban
k/Ye
sA
nnua
l CPI
(h
eadl
ine)
Poin
t ta
rget
: 3
per
cent
/+
/- 1
perc
enta
ge
poin
t/A
roun
d 2
year
s.
Mon
etar
y Po
licy
Repo
rt/
4 ti
mes
a
year
.
Mon
etar
y Po
licy
Inte
rest
Rat
e (O
vern
ight
in
terb
ank
rate
).
Braz
ilJu
ne 1
999
Due
to
conc
erns
on
fi sca
l fro
nt, c
olla
pse
of c
urre
ncy
unde
r sp
ecul
ativ
e at
tack
and
se
arch
for
a n
omin
al
anch
or w
ithi
n IM
F pr
ogra
mm
e.
Nat
iona
l M
onet
ary
Cou
ncil
(bot
h G
ovt
and
cent
ral b
ank
Gov
erno
r)/
Yes
Hea
dlin
e Br
oad
Nat
iona
l CPI
/ 4.
5 pe
r ce
nt
+/-
2 pe
rcen
tage
po
int
Year
ly t
arge
t.
Infl a
tion
Re
port
/4
tim
es a
ye
ar
An
over
nigh
t in
tere
st r
ate
(SEL
IC )
Hun
gary
June
200
1In
crea
sing
in
com
pati
bilit
y of
fi xe
d ex
chan
ge
rate
reg
ime
and
disi
nfl a
tion
; nee
d to
br
ing
dow
n in
fl ati
on
wit
h fu
ture
EU
m
embe
rshi
p in
min
d
Cen
tral
ban
k/Ye
sC
PI/
3 pe
r ce
nt
per
annu
m/
Med
ium
-te
rm.
Qua
rter
ly
Repo
rt o
n In
fl ati
on/
4 ti
mes
a
year
.
Inte
rest
rat
e on
2-w
eek
cent
ral b
ank
bond
.
App
endi
x Ta
ble
II.3
: Infl
ati
on T
arge
ting
Cou
ntri
es –
Em
ergi
ng M
arke
t Ec
onom
ies
(Con
td...
)
94
Appendix Tables
Cou
ntry
Sinc
e w
hen
Prev
ious
/ w
hy
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/op
erat
iona
l in
depe
nden
ce
Targ
et
indi
cato
r,
tim
efra
me
and
styl
e
Freq
uenc
y of
Mee
ting
Key
pol
icy
rate
Any
oth
er
com
men
tsPe
rfor
man
ce
on in
fl at
ion
Indo
nesi
aJu
ly 2
005
The
rela
tion
ship
be
twee
n m
onet
ary
aggr
egat
es a
nd
nom
inal
inco
me
beco
min
g te
nuou
s du
e to
inst
abili
ty
in in
com
e ve
loci
ty
of m
oney
fol
low
ing
fi nan
cial
der
egul
atio
n an
d le
ss s
ucce
ss w
ith
exch
ange
rat
e as
no
min
al a
ncho
r.
Gov
ernm
ent
in c
onsu
ltat
ion
wit
h ce
ntra
l ba
nk/
Yes.
CPI
/ 4.
5 pe
r ce
nt +
/- 1
perc
enta
ge
poin
t/M
ediu
m-
term
.
Mon
etar
y Po
licy
Repo
rt/
4 ti
mes
a
year
.
BI r
ate.
Isra
elIn
form
ally
in
199
2;fu
ll-fl e
dged
fr
om Ju
ne
1997
Lock
in d
isin
fl ati
on
and
defi n
e th
e sl
ope
of t
he e
xcha
nge
rate
cr
awlin
g pe
g.
Gov
ernm
ent.
in
con
sult
atio
n w
ith
cent
ral
bank
Gov
erno
r/Ye
s.
CPI
/ Ta
rget
R
ange
of
1- 3
pe
r ce
nt/
Wit
hin
2 ye
ars.
Infl a
tion
Re
port
/Tw
ice
a ye
ar.
Shor
t-ter
m
inte
rest
rat
e (o
vern
ight
tr
ansa
ctio
ns
betw
een
cent
ral b
ank
and
bank
s).
Mex
ico
2001
Dif
fi cul
ty w
ith
mon
etar
y ta
rget
ing,
un
relia
bilit
y of
re
lati
onsh
ip b
etw
een
mon
etar
y ba
se a
nd
infl a
tion
, and
lack
of
nom
inal
anc
hor
to g
uide
infl a
tion
ex
pect
atio
ns.
The
Boar
d of
G
over
nors
/Ye
s.
CPI
/ M
ulti
-an
nual
in
fl ati
on
targ
et3
per
cent
+/-1
per
ce
nt/
Med
ium
-te
rm.
Infl a
tion
Re
port
/4
tim
es a
ye
ar.
Ove
rnig
ht
inte
r-ba
nk
rate
.
App
endi
x Ta
ble
II.3
: Infl
ati
on T
arge
ting
Cou
ntri
es –
Em
ergi
ng M
arke
t Ec
onom
ies
(Con
td.)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
95
Cou
ntry
Sinc
e w
hen
Prev
ious
/ w
hy
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/op
erat
iona
l in
depe
nden
ce
Targ
et
indi
cato
r,
tim
efra
me
and
styl
e
Freq
uenc
y of
Mee
ting
Key
pol
icy
rate
Any
oth
er
com
men
tsPe
rfor
man
ce
on in
fl at
ion
Sout
h A
fric
aFe
brua
ry
2000
Follo
win
g lib
eral
isat
ion
and
stru
ctur
al
deve
lopm
ents
, ch
angi
ng r
elat
ions
hip
betw
een
outp
ut, p
rice
s an
d m
oney
gro
wth
, m
akin
g m
onet
ary
targ
etin
g le
ss u
sefu
l; ne
ed f
or g
reat
er
tran
spar
ency
in p
olic
y.
Gov
ernm
ent
in c
onsu
ltat
ion
wit
h ce
ntra
l ba
nk/
Yes.
CPI
/ A
Tar
get
rang
e of
3-6
pe
r ce
nt/
On
a co
ntin
uous
ba
sis.
Mon
etar
y Po
licy
Revi
ew/
Twic
e a
year
.
Repo
rat
e.
Peru
Janu
ary
2002
Form
alis
atio
n of
ea
rlie
r re
gim
e; g
reat
er
tran
spar
ency
of
polic
y.
Targ
et is
ap
prov
ed b
y th
e Bo
ard
of
Dir
ecto
rs.
CPI
/ 2
per
cent
+/-1
pe
rcen
tage
po
int/
At
all t
imes
.
Infl a
tion
Re
port
/4
tim
es a
ye
ar.
Refe
renc
e in
tere
st r
ate.
Phili
ppin
esJa
nuar
y 20
02Fo
rmal
isat
ion
and
sim
plifi
cati
on o
f ea
rlie
r re
gim
e;
grea
ter
tran
spar
ency
an
d fo
cus
on p
rice
st
abili
ty.
Gov
ernm
ent
in c
onsu
ltat
ion
wit
h ce
ntra
l ba
nk/Y
es.
CPI
/ 4
per
cent
+/-
1 pe
rcen
tage
po
int
for
2012
, 201
3 an
d 20
14/
Med
ium
-te
rm.
Infl a
tion
Re
port
/4
tim
es a
ye
ar
Key
Pol
icy
inte
rest
ra
tes
for
over
nigh
t re
po/ r
ever
se
repo
and
te
rm r
epo/
re
vers
e re
po
and
spec
ial
depo
sit
acco
unts
.
Targ
et is
an
noun
ced
2 ye
ars
in
adva
nce.
App
endi
x Ta
ble
II.3
: Infl
ati
on T
arge
ting
Cou
ntri
es –
Em
ergi
ng M
arke
t Ec
onom
ies
(Con
td.)
96
Appendix Tables
Cou
ntry
Sinc
e w
hen
Prev
ious
/ w
hy
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/op
erat
iona
l in
depe
nden
ce
Targ
et
indi
cato
r,
tim
efra
me
and
styl
e
Freq
uenc
y of
Mee
ting
Key
pol
icy
rate
Any
oth
er
com
men
tsPe
rfor
man
ce
on in
fl at
ion
Pola
nd19
98C
onsi
dere
d th
e m
ost
effe
ctiv
e w
ay t
o br
ing
dow
n in
fl ati
on
as a
pre
cond
itio
n fo
r su
bseq
uent
EU
m
embe
rshi
p.
Mon
etar
y Po
licy
Cou
ncil/
Yes.
CPI
/ 2.
5 pe
r ce
nt +
/- 1
perc
enta
ge
poin
ts/
Med
ium
-te
rm.
Infl a
tion
Re
port
/3
tim
es a
ye
ar
Refe
renc
e ra
te (t
he
rate
tha
t de
term
ines
th
e yi
eld
on
the
mai
n O
MO
s).
Sout
h K
orea
Apr
il 19
98U
nsta
ble
mon
ey
dem
and
follo
win
g st
ruct
ural
cha
nges
in
fi nan
cial
mar
kets
, and
w
ith
1997
fi na
ncia
l cr
isis
; dis
cont
inua
tion
of
exc
hang
e ra
te.
Cen
tral
Ban
k in
con
sult
atio
n w
ith
the
Gov
t./
Yes.
CPI
/ 3
per
cent
+/-
1 pe
rcen
tage
po
int/
3 ye
ars.
Mon
etar
y Po
licy
Repo
rt/
Twic
e a
year
.
Bank
of
Kor
ea B
ase
rate
.
Thai
land
May
200
0In
fl ati
on t
arge
ting
co
nsid
ered
mor
e ap
prop
riat
e w
ith
fl oat
ing
exch
ange
rat
e th
an m
oney
sup
ply
targ
etin
g af
ter
the
fi nan
cial
cri
sis
of 1
997.
MPC
in
cons
ulta
tion
w
ith
the
Gov
t./
Yes.
3.0
per
cent
+
/- 1.
5 pe
rcen
tage
po
ints
/8
quar
ters
.
Infl a
tion
Re
port
/4
tim
es a
ye
ar.
One
day
re
po r
ate.
Targ
et is
se
t by
MPC
an
nual
ly.
The
targ
et
deci
ded
in
agre
emen
t w
ith
the
Min
iste
r of
Fin
ance
, w
hich
th
en
requ
ires
ap
prov
al
by th
e Ca
bine
t.
App
endi
x Ta
ble
II.3
: Infl
ati
on T
arge
ting
Cou
ntri
es –
Em
ergi
ng M
arke
t Ec
onom
ies
(Con
td.)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
97
Cou
ntry
Sinc
e w
hen
Prev
ious
/ w
hy
infl
atio
n ta
rget
ing
Who
set
s th
e Ta
rget
/op
erat
iona
l in
depe
nden
ce
Targ
et
indi
cato
r,
tim
efra
me
and
styl
e
Freq
uenc
y of
Mee
ting
Key
pol
icy
rate
Any
oth
er
com
men
tsPe
rfor
man
ce
on in
fl at
ion
Turk
eyJa
nuar
y 20
06M
PC in
co
nsul
tati
on
wit
h th
e G
over
nmen
t.
Ann
ual C
PI/
5 pe
r ce
nt +
/-2
perc
enta
ge
poin
ts f
or
2012
, 201
3 an
d 20
14/
Mul
ti-y
ear
hori
zon
3 ye
ars.
Infl a
tion
Re
port
/4
tim
es a
ye
ar.
One
wee
k re
po a
ucti
on
rate
.
Inte
rest
ra
te
corr
idor
an
d re
quir
ed
rese
rve
rati
os a
lso
used
as
polic
y in
stru
-m
ents
.
Sour
ce:
1. P
etur
sson
T.
G.
(200
5):
“Infl
ati
on T
arge
ting
and
its
Eff
ects
on
Mac
roec
onom
ic P
erfo
rman
ce”,
SU
ERF
stud
ies:
200
5/5
- Th
e Eu
rope
an M
oney
and
Fin
ance
For
um, V
ienn
a.
2. H
amm
ond
G. (
2012
): “S
tate
of
the
Art
of
Infl a
tion
Tar
geti
ng”,
CC
BS, H
andb
ook
No.
29, B
ank
of E
ngla
nd.
App
endi
x Ta
ble
II.3
: Infl
ati
on T
arge
ting
Cou
ntri
es –
Em
ergi
ng M
arke
t Ec
onom
ies
(Con
cld.
)
98
Appendix Tables
Appendix Table II.4A: Individual Countries Infl ation Targets
Country Target Measure Target 2013 Target Type
Armenia H CPI 4% ± 1.5 pp P + TAustralia H CPI 2% - 3% RangeBrazil H CPI 4.5% ± 2 pp P + TCanada H CPI 2% (mid-point of 1%-3%) P + TChile H CPI 3% ± 1 pp P + TColombia H CPI 2% - 4% RangeCzech Republic H CPI 2% ± 1 pp P + TGhana H CPI 9% ± 2 pp P + TGuatemala H CPI 4% ± 1 pp P + THungary H CPI 3% PointIceland H CPI 2.5% PointIndonesia H CPI 4.5% ± 1 pp P + TIsrael H CPI 1% - 3% RangeMexico H CPI 3% ± 1 pp P + TNew Zealand H CPI 1% - 3% RangeNorway H CPI 2.5% PointPeru H CPI 2% ± 1 pp P + TPhillippines H CPI 4.0% ± 1 pp P + TPoland H CPI 2.5% ± 1 pp P + TRomania H CPI 2.5% ± 1 pp P + TSerbia H CPI 4.0% ± 1.5 pp P + TSouth Africa H CPI 3% - 6% RangeSouth Korea H CPI 2.5% - 3.5% RangeSweden H CPI 2% PointThailand Core Infl ation 0.5% - 3.0% RangeTurkey H CPI 5.0% ± 2 pp P + TUnited Kingdom H CPI 2% Point
H CPI - Headline CPI; P+ T - Point with tolerance; PP – Percentage pointSource: Hammond G. (2012);”State of the art of infl ation targeting”, CCBS, Handbook - No.29, Bank of England
and Website of Central Banks
Appendix Table II.4B: Non-Infl ation Targeting Countries
Country Target Measure Desired level of Infl ation
US PCE 2 %ECB H CPI Below but close to 2%Malaysia H CPI 2% - 3%Singapore H CPI 3% - 4%Russia H CPI 5% - 6%China H CPI 3.50%
PCE: Personal Consumption ExpenditureSource: Website of Central Banks
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
99
Appendix Table II.5: Time Horizon for attending Price Stability
Infl ation Targeting Non-infl ation Targeting
Country Time horizon Country Time horizon
Armenia Medium term US Long-termAustralia Medium term ECB Medium-termBrazil Yearly Target Malaysia Short-termCanada Six-eight quarters; current target extends to Dec.2016 Singapore Short-termChile Around two years Russia Medium-termColombia Medium term China Short-termCzech Republic Medium term,12-18 months Ghana 18-24 months Guatemala End of year Hungary Medium term Iceland On average Indonesia Medium term Israel Within two years Mexico Medium term New Zealand Medium term Norway Medium term Peru At all times Philippines Medium term(from 2012-14) Poland Medium term Romania Medium term target from 2013 Serbia Medium term South Africa On a continuous basis South Korea Three years Sweden Normally two years Thailand Eight quarters Turkey Multi year(Three years) United Kingdom At all times
Source: Hammond G. (2012);”State of the art of infl ation targeting”, CCBS, Handbook - No.29, Bank of England and Website of Central Banks
100
Appendix Tables
App
endi
x Ta
ble
II.6
A: C
omm
unic
atio
n an
d Tr
ansp
aren
cy P
ract
ices
in In
fl at
ion
Targ
etin
g C
ount
ries
Coun
try
Ope
n le
tter
Parl
iam
enta
ry h
eari
ngs?
Pres
s N
otic
e/
Conf
eren
ceM
inut
esVo
tes
Infl a
tion
Freq
uenc
y
Arm
enia
No
Yes,
ann
ual
PRYe
s, w
ithi
n te
n da
ysN
oYe
s4
Aust
ralia
No
Yes,
tw
ice
year
lyN
otic
eYe
s, a
fter
tw
o w
eeks
n/a
Yes
4Br
azil
Yes
Yes,
six
per
yea
rPR
+ P
C f
or IR
Yes,
aft
er e
ight
day
sBa
lanc
e of
vot
esYe
s4
Can
ada
No
Yes,
tw
ice
year
lyPR
+ P
C f
or IR
No
n/a
Yes
4C
hile
Ye
s, f
our
tim
es p
er y
ear
PR
Yes,
aft
er t
wo
wee
ksye
sYe
s4
Col
ombi
aN
oYe
s, t
wic
e ye
arly
PR +
PC
for
IRYe
s, a
fter
tw
o w
eeks
Maj
orit
y/un
anim
ous
Yes
4C
zech
Rep
ublic
No
No
(Rep
ort)
PR +
PC
for
IRYe
s, a
fter
eig
ht d
ays
Yes
Yes
4G
hana
No
No
PR +
PC
N
on/
aYe
s4
to 6
Gua
tem
ala
No
Yes,
tw
ice
year
lyPR
+ P
C
Yes,
aft
er f
our
wee
ksno
Yes
3H
unga
ry
No
Yes,
onc
e a
year
PCYe
sye
sYe
s4
Icel
and
Yes
Yes,
tw
ice
year
lyPR
+ P
C
Yes
Bala
nce
of v
otes
Yes
2 pl
us 2
Indo
nesi
aN
oN
oPR
No
n/a
Yes
4Is
rael
No
Yes,
tw
ice
year
lyPR
Yes,
aft
er t
wo
wee
ksBa
lanc
e of
vot
esYe
s2
Mex
ico
No
Yes,
not
reg
ular
PRYe
s, a
fter
tw
o w
eeks
n/a
Yes
4N
ew Z
eala
ndO
ther
Yes,
fou
r ti
mes
a y
ear
PR +
PC
for
IRN
on/
aYe
s4
Nor
way
No
Yes
PR +
PC
N
on/
aYe
s3
Peru
No
Yes,
onc
e a
year
Tele
conf
eren
ceN
oN
oYe
s4
Phill
ippi
nes
Yes
No
PR +
PC
Ye
s, a
fter
fou
r w
eeks
No
Yes
4Po
land
No
No(a
)PR
+ P
C
Yes,
aft
er t
hree
wee
ksYe
s in
IRYe
s4
Rom
ania
No
No
PR +
PC
for
IRN
oN
o Ye
s4
Serb
iaYe
sN
o(b)
PR +
PC
N
oN
oYe
s4
Sout
h A
fric
aN
oYe
s, a
t lea
st th
ree
per
year
PR +
PC
N
on/
aYe
s2
Sout
h K
orea
No
Yes
PR +
PC
Ye
s, a
fter
six
wee
ksN
oYe
s2
Swed
enN
oYe
s, t
wic
e ye
arly
PRYe
s, a
fter
tw
o w
eeks
Yes
Yes
3 pl
us 3
Thai
land
Yes
No
PR +
PC
Ye
s, a
fter
tw
o w
eeks
Bala
nce
of v
otes
Yes
4Tu
rkey
Yes
Yes,
tw
ice
year
lyPR
Yes
No
Yes
4U
nite
d K
ingd
omYe
sYe
s, t
hree
per
yea
rPR
+ P
C f
or IR
Yes,
aft
er t
wo
wee
ksYe
sYe
s4
IR: I
nfl a
tion
Rep
ort.
P
C: P
ress
Con
fere
nce
PR
: Pre
ss R
elea
se.
(a) G
over
nor
repo
rts
to L
ower
Hou
se o
nce
a ye
ar o
n M
onet
ary
Polic
y in
pre
cedi
ng y
ear.
(b) G
over
nor
expl
ains
rep
orts
to
Nat
iona
l Ass
embl
y.So
urce
: Ham
mon
d G
. (20
12);”
Stat
e of
the
art o
f infl
ati
on ta
rget
ing”
, CC
BS, H
andb
ook
- No.
29, B
ank
of E
ngla
nd a
nd W
ebsi
te o
f Cen
tral
Ban
ks
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
101
Appendix Table II.6B: Communication and Transparency Practices in Non-infl ation Targeting Countries
Country Press Notice/ Conference
Minutes of Monetary Policy
Meeting
Infl ation Projection
Other Publications
US PR + PC Yes, within twenty days
2 years ahead
ECB PR + PC No N.A.
Malaysia PR No One Year Outlook and Policy (annual)
Singapore PR No One year Macroeconomic Review (twice a year)
Russia PR No N.A. Guidelines for Single State Monetary Policy, Monetary Policy Report
China PR No One year Quarterly Monetary Policy Report
PR: Press Release; PC: Press Conference. Source: Website of Central Banks.
102
Appendix Tables
Cou
ntry
/C
entr
al B
ank
Dec
isio
n m
akin
g by
Poli
cy
obje
ctiv
eM
onet
ary
poli
cy t
arge
tK
ey p
olic
y ra
teSt
andi
ng
Faci
lity
Rese
rve
requ
irem
ents
Mar
ket
oper
atio
ns
Uni
ted
Stat
es(F
eder
al
Rese
rve
Syst
em)
Fede
ral
Ope
n M
arke
t C
omm
itte
e
Prom
ote
pric
e st
abili
ty a
nd
max
imum
su
stai
nabl
e em
ploy
men
t
Max
imum
em
ploy
men
t an
d 2
per
cent
in
fl ati
on*
Unc
olla
tera
lised
in
terb
ank
rate
Prim
ary
Cre
dit
Faci
lity.
N
o D
epos
it
faci
lity*
*
Yes
Yes
Uni
ted
Kin
gdom
(Ban
k of
En
glan
d)
Mon
etar
y Po
licy
Com
mit
tee
To m
aint
ain
pric
e st
abili
ty
and
to s
uppo
rt
the
obje
ctiv
es
for
grow
th a
nd
empl
oym
ent
An
infl a
tion
ta
rget
ing
fram
ewor
k
The
offi c
ial B
ank
Rat
e pa
id o
n co
mm
erci
al b
ank
rese
rves
Yes
No
Yes
Braz
il(C
entr
al B
ank
of B
razi
l)
Mon
etar
y Po
licy
Com
mit
tee
Ach
ieve
men
t of
in
fl ati
on t
arge
ts
set
by t
he
Gov
ernm
ent
An
infl a
tion
ta
rget
ing
fram
ewor
k
Inte
rest
rat
e on
ove
rnig
ht
inte
rban
k lo
ans
Yes
Yes
Yes
Can
ada
(Ban
k of
C
anad
a)
Gov
erni
ng
Cou
ncil
Con
trib
utin
g to
sus
tain
ed
econ
omic
gr
owth
, ris
ing
leve
ls o
f em
ploy
men
t an
d im
prov
ed
livin
g st
anda
rds
An
infl a
tion
ta
rget
ing
fram
ewor
k
Inte
rest
rat
e on
co
llate
raliz
ed
mar
ket-b
ased
ov
erni
ght
tran
sact
ions
Yes
No
Yes
App
endi
x Ta
ble
III.1
: Mon
etar
y Po
licy
Fra
mew
ork
- Int
erna
tion
al E
xper
ienc
e
*: I
n it
s re
cent
pol
icy
anno
unce
men
ts,
the
Fed
has
indi
cate
d th
at t
heir
ass
essm
ent
sugg
ests
tha
t it
will
be
appr
opri
ate
to m
aint
ain
the
curr
ent
targ
et r
ange
for
the
Fed
eral
Fun
ds r
ate
wel
l pa
st t
he t
ime
that
the
une
mpl
oym
ent
rate
dec
lines
bel
ow 6
.5 p
er c
ent,
esp
ecia
lly i
f pr
ojec
ted
infl a
tion
con
tinu
es t
o ru
n be
low
the
com
mit
tee’
s 2
per
cent
long
er-r
un g
oal.
** In
200
8, t
he F
ed s
tart
ed p
ayin
g in
tere
st o
n re
quir
ed a
nd e
xces
s re
serv
es, t
o av
oid
dow
nwar
d pr
essu
res
on t
he F
ed F
unds
rat
e.
(Con
td...
)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
103
Cou
ntry
/C
entr
al B
ank
Dec
isio
n m
akin
g by
Poli
cy
obje
ctiv
eM
onet
ary
poli
cy t
arge
tK
ey p
olic
y ra
teSt
andi
ng
Faci
lity
Rese
rve
requ
irem
ents
Mar
ket
oper
atio
ns
Euro
are
a(E
urop
ean
Syst
em o
f C
entr
al B
anks
)
Gov
erni
ng
Cou
ncil
To m
aint
ain
pric
e st
abili
tyIn
fl ati
on b
elow
bu
t cl
ose
to
2 pe
r ce
nt o
ver
med
ium
-term
Min
imum
bid
ra
te in
mai
n re
fi nan
cing
op
erat
ions
Yes
Yes
Yes
Aust
ralia
(Res
erve
Ban
k of
Aus
tral
ia)
Rese
rve
Bank
Bo
ard
Ach
ieve
men
t of
in
fl ati
on t
arge
tA
n in
fl ati
on
targ
etin
g fr
amew
ork
Targ
et c
ash
rate
Yes
No
Yes
Japa
n(B
ank
of Ja
pan)
The
Polic
y Bo
ard
Mul
tipl
e ob
ject
ives
2 pe
r ce
nt
infl a
tion
Unc
olla
tera
lized
ov
erni
ght
call
rate
Yes
Yes
Yes
Sing
apor
e (M
onet
ary
Auth
orit
y of
Si
ngap
ore)
Mon
etar
y an
d In
vest
men
t Po
licy
Pric
e st
abili
ty
for
sust
aina
ble
econ
omic
gr
owth
Pric
e st
abili
ty
for
sust
aina
ble
econ
omic
gr
owth
Exch
ange
rat
eYe
sYe
sEx
chan
ge
inte
rven
tion
Mex
ico
(Ban
k of
M
exic
o)
Boar
d of
G
over
nors
Ach
ieve
men
t of
pr
ice
stab
ility
An
infl a
tion
ta
rget
ing
fram
ewor
k
Targ
et f
or t
he
inte
rban
k ov
erni
ght
fund
ing
rate
Yes
No
Yes
Swit
zerl
and
(Sw
iss
Nat
iona
l Ba
nk)
Gov
erni
ng
Boar
dPr
ice
stab
ility
Pric
e st
abili
tyC
HF
3-m
onth
Li
bor
Yes
Yes
Yes
Swed
en(R
iksb
ank)
Exec
utiv
e Bo
ard
Mai
ntai
n pr
ice
stab
ility
An
infl a
tion
ta
rget
ing
fram
ewor
k
Repo
rat
eYe
sN
oYe
s
Kor
ea(B
ank
of K
orea
)M
onet
ary
Polic
y C
omm
itte
ePr
ice
stab
ility
An
infl a
tion
ta
rget
ing
fram
ewor
k
The
Bank
of
Kor
ea B
ase
Rat
eYe
sYe
sYe
s
App
endi
x Ta
ble
III.1
: Mon
etar
y Po
licy
Fra
mew
ork
- Int
erna
tion
al E
xper
ienc
e (C
oncl
d.)
104
Appendix Tables
Coun
try
Bank
Res
erve
Stan
ding
Fac
ility
Mai
n Li
quid
ity
Ope
rati
onO
ther
dis
cret
iona
ryCo
unte
r par
ty
Req.
Avg.
Loan
Dep
osit
Teno
rIn
stru
men
t(s)
Teno
rFr
eq.
Inst
rum
ent
Teno
rCo
llate
ral
Lend
ing
Ope
rati
ons
Aust
ralia
N–
YY
Ove
rnig
htRe
po/
Rev.
repo
1 da
y to
12
m
onth
s
daily
Out
right
/ Fx
-Sw
ap /
term
dep
osit
1 da
y to
3
mon
thdi
scre
tion
Wid
e
Braz
ilY
YY
YTw
o D
ays
Repo
/Re
v. re
po1-
30 d
ays
daily
Out
right
ope
ratio
n;
non-
stan
dard
ized
, no
n-re
gula
r
no d
iscr
etio
n
Cana
daN
–Y
YO
vern
ight
OM
O /
Intr
aday
thro
ugh
spec
ial p
urch
ase
and
Resa
le
daily
colla
tera
l inc
lude
s U
S tr
easu
ry b
ills,
no
tes
and
bond
s,
list o
f tre
asur
e w
ere
expa
nded
dur
ing
the
cris
is
OM
O fo
r PD
s, S
F fo
r Pay
men
t and
se
ttle
men
t sys
tem
pa
rtic
ipan
ts
Euro
Are
aY
YY
YO
vern
ight
Colla
tera
lized
cr
edit
varia
ble
wee
kly/
mon
thly
OM
O a
nd In
trad
ay
cred
itth
e Go
vern
ing
coun
cil h
as th
e di
scre
tion
to e
xpan
d
Wid
e in
term
s of
bot
h ty
pe a
nd
part
icip
ants
Hon
g Ko
ng
SAR
N–
YO
vern
ight
Two
way
con
vert
ibili
ty u
nder
taki
ngal
l exc
hang
e fu
nd
bill
and
note
s,
exte
nded
to u
se U
S Tr
easu
ries
und
er
disc
ount
win
dow
Japa
nY
YY
YFi
xed
Term
Repo
(s
hort
run)
over
nigh
t to
1 y
ear
2-3
times
a
day
OM
OJa
pan
Gove
rnm
ent
Bond
s / C
Ps; L
aw
gene
rally
lim
its
expa
ndin
g co
llate
ral
Wid
e bu
t var
ies
with
fa
cilit
ies
Kore
aY
YY
YO
vern
ight
Repo
/Rev
. re
po (i
ssue
r / r
edem
ptio
n of
mon
ey
stab
ilisa
tion
bond
s)
7 da
ysw
eekl
yAd
ditio
nal
repo
s1-
3 da
ysBa
nk o
f Kor
ea a
ct
give
s th
e ba
nk
disc
retio
n to
ext
end
loan
aga
inst
the
colla
tera
l of a
ny
asse
t.
Nar
row
for O
MO
, w
ide
for S
F
App
endi
x Ta
ble
III.2
: Sta
ndin
g Fa
cili
ties
, Mai
n Li
quid
ity
Ope
rati
ons
and
Oth
er D
iscr
etio
nary
Ope
rati
ons
of S
ome
Maj
or C
entr
al B
anks
– : N
ot a
pplic
able
.(C
ontd
...)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
105
Coun
try
Bank
Res
erve
Stan
ding
Fac
ility
Mai
n Li
quid
ity
Ope
rati
onO
ther
dis
cret
iona
ryCo
unte
r par
ty
Req.
Avg.
Loan
Dep
osit
Teno
rIn
stru
men
t(s)
Teno
rFr
eq.
Inst
rum
ent
Teno
rCo
llate
ral
Lend
ing
Ope
rati
ons
Mex
ico
NY
YO
vern
ight
Ope
n m
arke
t op
erat
ion
1-25
day
sda
ilyLo
ng te
rm s
teril
isat
ion
of e
xces
s liq
uidi
ty/
spor
adic
use
of
com
puls
ory
depo
sit
cent
ral b
ank
has
the
disc
retio
n to
ex
pand
oth
er ty
pe o
f co
llate
rals
OM
O fo
r all
loca
l ba
nks,
SF
for p
riva
te
sect
or b
anks
onl
y
Sing
apor
eY
YY
YO
vern
ight
Exch
ange
rate
in
terv
entio
nFS
- spo
tdi
scre
-tio
nary
Repo
/ Fx
-sw
ap
dire
ct le
ndin
g / b
orro
win
g
Up
to 1
ye
arM
AS h
as th
e di
scre
tion
to e
xpan
d co
llate
ral
PD o
nly
for O
MO
, al
l RTG
S pa
rtic
ipan
ts fo
r SF
Swed
enN
YY
Ove
rnig
htRe
po /
Riks
bank
cert
ifi ca
te
1 w
eek
loan
/ de
posi
tO
ver-
nigh
tAc
t allo
ws
expa
nsio
n of
col
late
ral
Wid
e
Switz
erla
ndY
YY
Ove
rnig
htO
pen
mar
ket
oper
atio
n /r
epo
/SN
B Bi
lls
Mos
tly
one
wee
kda
ilyIn
ject
ion
/ab
sorp
tion
thro
ugh
auct
ions
Mos
tly
over
-ni
ght
SNB
has
disc
retio
n on
col
late
ral
Wid
e in
term
s of
type
UK
Volu
ntar
yY
YO
vern
ight
Shor
t ter
m (fi
xed
rate
) lon
g te
rm (v
aria
ble
rate
repo
op
erat
ion)
wee
kly
/ m
onth
lySt
erlin
g Fi
nanc
ing
thro
ugh
OM
Obr
oad
base
d se
curi
ty
for d
isco
unt w
indo
wVa
ries
with
faci
lity-
bank
s fo
r liq
uidi
ty
USA
YY
Prim
ary
Cred
itGe
nera
lly
Ove
rnig
htre
poup
to 6
5 da
ysda
ily /
wee
kly
OM
Ova
riabl
eU
nder
exc
eptio
nal
situ
atio
nPD
s on
ly O
MO
s;
wid
e fo
r SF
Sour
ce:
BIS
Mar
kets
Com
mitt
ee s
ever
al p
ublic
atio
ns,
web
-site
s of
cen
tral
ban
ks,
Nar
row
=re
stric
ted
for
sele
ct f
ew i
nstit
utio
ns (
wid
e ot
herw
ise)
; Y=
yes,
N=
No,
PD
=pr
imar
y de
aler
s, S
F =
Stan
ding
liqu
idity
faci
lity.
App
endi
x Ta
ble
III.2
: Cro
ss C
ount
ry S
tand
ing
Faci
liti
es, M
ain
Liqu
idit
y O
pera
tion
s an
d O
ther
Dis
cret
iona
ry O
pera
tion
s (C
oncl
d.)
106
Appendix Tables
Dep
osit
Rat
es*
Lend
ing
Rate
Savi
ng D
epos
itTe
rm D
epos
it
Effe
ctiv
e fr
omRe
stri
ctio
ns a
nd
Regu
lati
ons
Pres
crib
edM
onth
&
Year
Res
tric
tio
ns
and
Reg
ula
tio
ns
Pres
crib
edM
onth
&
Year
Res
tric
tio
ns
and
Reg
ula
tio
ns
Pres
crib
ed
July
1,
1977
3 pe
r ce
nt (c
hequ
eble
de
posi
ts) a
nd 5
per
ce
nt (n
on- c
hequ
eabl
e)
Apr
. 198
5Ba
nks
wer
e al
low
ed t
o se
t in
tere
st
rate
s fo
r mat
urit
ies
betw
een
15 d
ays
and
up to
1 y
ear,
sub
ject
to a
cei
ling
of 8
per
cen
t.
Mar
ch
1981
A b
road
fra
mew
ork
of in
tere
st r
ates
w
as p
rovi
ded
wit
h fi
xed
rat
es o
n ce
rtai
n ty
pes
of a
dvan
ces
and
ceili
ng
rate
on
othe
r ty
pes
of a
dvan
ces.
Mar
ch 2
, 19
784.
5 pe
r ce
nt, u
nifo
rmly
May
198
5Fr
eed
om
to
set
in
tere
st r
ates
ac
cord
ed
in
A
pri
l 1
96
5
was
w
ithd
raw
n.
Oct
ober
19
88Fi
xed
rate
sti
pula
tion
s co
nve
rted
in
to fl
oor r
ates
wit
h op
tion
to b
anks
to
rai
se t
he r
ates
.
Apr
il 24
,199
26.
0 pe
r ce
ntO
ct. 1
989
Dom
esti
c sh
ort
term
dep
osit
s of
m
atur
ity
46 d
ays
to 9
0 da
ys a
nd 9
0 da
ys t
o on
e ye
ar m
erge
d to
geth
er
wit
h un
ifor
m i
nter
est
rate
pay
able
, ef
fect
ive
Oct
ober
11,
198
9.
Sept
embe
r 19
90D
isco
nti
nua
tion
of
sect
or-s
peci
fic
and
prog
ram
me-
spec
ifi c
inte
rest
rate
st
ipul
atio
ns, b
arri
ng a
few
are
as li
ke
agri
cult
ure
, sm
all
ind
ust
ries
, di
ffer
enti
al r
ate
of i
nte
rest
(D
RI)
sche
me
and
expo
rt c
redi
t. L
inki
ng
inte
rest
rat
e to
the
siz
e of
the
loa
n (o
ver `2
lakh
) was
intr
oduc
ed.
July
1,1
993
5.0
per
cent
Apr
. 199
2Re
plac
emen
t of m
atur
ity-
wis
e ce
iling
ra
tes
by a
sin
gle
ceili
ng ra
te o
f 13
per
cent
on
all d
epos
its
abov
e 46
day
s.
Apr
il 19
92Th
e in
tere
st r
ates
of
SCBs
(ex
cept
D
RI a
dvan
ces a
nd e
xpor
t cre
dit)
wer
e ra
tion
aliz
ed b
y br
ingi
ng th
e si
x sl
abs
of a
dvan
ces
to f
our
slab
s ac
cord
ing
to s
ize
of c
redi
t.
Nov
embe
r 1,
199
44.
5 pe
r ce
ntN
ov. 1
994
Cei
ling
rate
was
bro
ught
dow
n to
10
per
cent
.A
pril
1993
Le
nd
ing
rate
s w
ere
fu
rth
er
rati
onal
ized
as
the
num
ber
of s
labs
w
as b
rou
ght
do
wn
fro
m f
ou
r ca
tego
ries
to
thre
e ca
tego
ries
by
mer
ging
the
fi rs
t tw
o sl
abs.
App
endi
x Ta
ble
III.3
: Der
egul
atio
n of
Inte
rest
Rat
es in
Indi
a
(Con
td...
)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
107
Dep
osit
Rat
es*
Lend
ing
Rate
Savi
ng D
epos
itTe
rm D
epos
it
Effe
ctiv
e fr
omRe
stri
ctio
ns a
nd
Regu
lati
ons
Pres
crib
edM
onth
&
Year
Res
tric
tio
ns
and
Reg
ula
tio
ns
Pres
crib
edM
onth
&
Year
Res
tric
tio
ns
and
Reg
ula
tio
ns
Pres
crib
ed
Apr
il 1,
20
004.
0 pe
r ce
ntA
pr. 1
995
Cei
ling
rate
rai
sed
to 1
2 pe
r ce
nt.
Oct
ober
19
94Le
ndin
g ra
tes
for c
redi
t lim
it o
f ove
r `2
lak
h w
ere
dere
gula
ted.
Ban
ks
wer
e re
quir
ed to
dec
lare
thei
r Pri
me
Lend
ing
Rat
es (P
LRs)
.
Mar
ch 1
, 20
03 3
.5 p
er c
ent
Oct
. 199
5In
tere
st r
ates
on
dep
osit
s w
ith
mat
uri
ty o
f ov
er t
wo
year
s w
ere
free
d.
Oct
ober
19
95In
tere
st r
ate
on a
dvan
ces
agai
nst
te
rm d
epos
its
of `
2 la
kh a
nd a
bove
fo
r bot
h do
mes
tic
and
NRE
dep
osit
s w
ere
dere
gula
ted.
May
3,
2011
4.0
per
cent
Jul.
1996
Free
dom
to s
et ra
tes
for t
erm
dep
osit
ab
ove
one
year
mat
urit
y. M
inim
um
peri
od o
f ter
m d
epos
it b
roug
ht d
own
from
46
days
to
30 d
ays.
For
th
e m
atur
ity
buck
et o
f 30
days
to 1
yea
r,
bank
s co
uld
fi x in
tere
st ra
tes
subj
ect
to a
cei
ling.
Febr
uary
19
97Ba
nks
allo
wed
to p
resc
ribe
PLR
s an
d sp
read
s se
para
tely
for l
oan
and
cash
cr
edit
com
pone
nts
of lo
ans.
Oct
25,
20
11D
ereg
ulat
ion
subj
ect
to
cond
itio
ns.
Apr
. 199
7C
eili
ng
inte
rest
rat
e on
dom
esti
c te
rm d
epos
its
of m
atur
ity
of 3
0 da
ys
and
up to
1 y
ear
was
link
ed to
Ban
k R
ate
Oct
ober
19
97Fo
r te
rm lo
ans
of 3
yea
rs a
nd a
bove
, se
para
te P
rim
e Te
rm L
endi
ng R
ates
(P
TL
Rs)
wer
e re
qu
ired
to
be
anno
unce
d by
ban
ks.
Oct
.199
7Te
rm d
epo
sit
rate
s w
ere
full
y de
regu
late
d.A
pril
1998
PLR
conv
erte
d as
a c
eilin
g ra
te o
n lo
ans
up t
o `2
lakh
.
App
endi
x Ta
ble
III.3
: Der
egul
atio
n of
Inte
rest
Rat
es in
Indi
a (C
ontd
.)
108
Appendix Tables
Dep
osit
Rat
es*
Lend
ing
Rate
Savi
ng D
epos
itTe
rm D
epos
it
Effe
ctiv
e fr
omRe
stri
ctio
ns a
nd
Regu
lati
ons
Pres
crib
edM
onth
&
Year
Res
tric
tio
ns
and
Reg
ula
tio
ns
Pres
crib
edM
onth
&
Year
Res
tric
tio
ns
and
Reg
ula
tio
ns
Pres
crib
ed
Apr
.199
8Fr
eedo
m to
off
er d
iffe
rent
ial i
nter
est
rate
for b
ulk
depo
sits
of ̀
15 la
kh a
nd
abov
e. F
reed
om t
o se
t ow
n p
enal
in
tere
st r
ates
on
pre
mat
ure
w
ith
dra
wal
of
do
mes
tic
term
d
epo
sits
. M
inim
um
per
iod
of
mat
urit
y of
ter
m d
epos
its
redu
ced
from
30
days
to
15 d
ays.
Apr
il 19
99Ba
nks
wer
e pr
ovid
ed f
reed
om t
o op
erat
e te
nor
linke
d PL
R.
Apr
. 200
1M
inim
um m
atur
ity
peri
od o
f 15
days
re
duce
d to
7 d
ays
for
wh
oles
ale
depo
sits
of `1
5 la
kh a
nd a
bove
.
Oct
ober
19
99Fl
exib
ility
to
char
ge i
nte
rest
rat
es
wit
hou
t re
fere
nce
to
the
PLR
on
cert
ain
cate
gori
es o
f lo
ans/
cred
it.
Nov
. 200
4M
inim
um m
atur
ity
peri
od o
f 15
days
re
duce
d to
7 d
ays
for
all d
epos
its.
Apr
il 20
00B
anks
all
owed
to
char
ge f
ixed
/fl
oati
ng
rate
on
th
eir
len
din
g fo
r cr
edit
lim
it o
f ov
er `
2 la
kh.
Jan.
2013
Ban
ks w
ere
per
mit
ted
to
offe
r di
ffer
enti
al d
epos
it r
ates
for
bul
k de
posi
ts o
f `1
cro
re a
nd a
bove
.
Apr
il 20
01C
omm
erci
al b
anks
allo
wed
to
lend
at
sub
-PLR
rat
e fo
r lo
ans
abov
e `2
la
kh.
Apr
il 20
03Te
nor l
inke
d PL
R sy
stem
repl
aced
by
Ben
chm
ark
Prim
e Le
nd
ing
Rat
e (B
PLR)
.
July
201
0In
trod
ucti
on o
f Ba
se R
ate
Syst
em,
wh
ich
ser
ves
as t
he
fl oor
rat
e fo
r al
mos
t al
l typ
es o
f ad
vanc
es.
*: T
he r
egul
atio
n th
at n
o in
tere
st m
ay b
e pa
id o
n cu
rren
t de
posi
ts c
onti
nues
till
dat
e.
App
endi
x Ta
ble
III.3
: Der
egul
atio
n of
Inte
rest
Rat
es in
Indi
a (C
oncl
d.)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
109
Appendix Table III.4: Money Demand Estimates
M3 defl ated by GDP defl atorRolling Reg Output: Log(real money) , log(rgdp), call rate (i) with 15-year window
start end lrgdp t-stat Call Rate t-stat Constant t-stat
1 1991 2005 1.57 18.5 0.00 0.3 -10.75 -12.32 1992 2006 1.58 21.7 0.00 0.3 -10.85 -14.43 1993 2007 1.57 28.1 0.00 -0.4 -10.79 -18.54 1994 2008 1.58 35.4 -0.01 -1.2 -10.80 -23.15 1995 2009 1.59 35.7 0.00 -0.9 -10.94 -23.16 1996 2010 1.60 35.1 0.00 -0.6 -11.05 -22.77 1997 2011 1.52 29.3 -0.01 -1.2 -10.23 -17.88 1998 2012 1.44 34.6 -0.02 -2.6 -9.34 -20.59 1999 2013 1.40 37.2 -0.02 -3.1 -8.89 -21.9
M3 defl ated by WPI IndexRolling Reg Output: Log(real money) , log(rgdp), call rate (i) with 15-year window
start end lrgdp t-stat Call Rate t-stat Constant t-stat
1 1991 2005 1.59 23.1 0.00 0.1 -10.94 -15.42 1992 2006 1.58 26.6 0.00 0.0 -10.83 -17.63 1993 2007 1.56 36.1 0.00 -1.2 -10.61 -23.54 1994 2008 1.56 44.9 -0.01 -2.0 -10.59 -29.05 1995 2009 1.56 44.0 -0.01 -1.8 -10.61 -28.16 1996 2010 1.55 40.4 -0.01 -1.6 -10.55 -25.67 1997 2011 1.51 34.4 -0.01 -1.0 -10.05 -20.78 1998 2012 1.42 45.3 -0.02 -2.9 -9.13 -26.69 1999 2013 1.39 49.7 -0.02 -3.5 -8.73 -29.1
M3 defl ated by GDP defl atorRolling Reg Output: Log(real money) , log(rgdp), WALR with 15-year window
start end lrgdp t-stat WALR t-stat Constant t-stat
1 1991 2005 1.54 31.5 0.00 -1.0 -10.44 -21.62 1992 2006 1.15 16.1 -0.07 -6.1 -5.60 -6.53 1993 2007 1.18 14.6 -0.06 -5.3 -5.89 -6.04 1994 2008 1.30 16.8 -0.05 -4.2 -7.28 -7.75 1995 2009 1.32 17.1 -0.05 -4.0 -7.54 -8.06 1996 2010 1.33 13.5 -0.04 -3.0 -7.74 -6.47 1997 2011 1.23 14.9 -0.06 -4.4 -6.45 -6.38 1998 2012 1.24 22.7 -0.06 -5.2 -6.63 -9.59 1999 2013 1.22 26.4 -0.06 -5.5 -6.34 -10.5
WALR: Weighted Avereage Lending Rate.
110
Appendix Tables
Appendix Table III.5: Access to Liquidity Under Refi nance Facilities
15-Apr-1997 A general refi nance facility was introduced effective from April 26, 1997 under which all SCBs (expect RRBs) were provided General Refi nance equivalent to 1 per cent of each bank's forthightly average outstanding aggregate deposits in 1996-97 in two blocks of 4 weeks each at Bank rate for the fi rst block of 4 weeks and Bank rate plus one percentage point for second block of 4 weeks.
15-Apr-1997 From April 26, 1997 the base level ECR limit at 20 per cent of export credit as on Feb. 16, 1996 was withdrawn and SCBs were provided ECR only to the extent of 100 per cent of the increase in outstanding export credit eligible for refi nance over the level of such credit as on Feb. 16, 1996. Interest rate was retained at 11 per cent (i.e., the Bank Rate).
16-Jan-1998 Effective from Jan 17, 1998 the ECR limit was lowered to 50 per cent of the increase in outstanding export credit eligible for refi nance over the level of such credit as on Feb. 16, 1996, in order to reduce the access to liquidity in the context of measures announced relating to foreign exchange market.
16-Jan-1998 Access to General Refi nance Facility was reduced to equivalent to 0.25 per cent of forthightly average outstanding aggregate deposits in 1996-97.
15-Apr-1998 General Refi nance Facility was closed (effective from April 20, 1998).
29-Apr-1998 Export Credit Refi nance Limit was raised to 100 per cent (effective from May 9, 1998).
19-Apr-2001 With effect from May 5, 2001 SCBs were provided ECR to the extent of 15 per cent of the outstanding export credit eligible for refi nance as at the second preceding fortnight.
3-Nov-2008 A special refi nance facility was introduced under which all SCBs (excluding RRBs) were provided refi nance (which could be fl exibly drawn and repaid) from the Reserve Bank equivalent to up to 1.0 per cent of each bank’s NDTL as on October 24, 2008 at the LAF repo rate up to a maximum period of 90 days.
18-May-2004 ECR made available at the Reverse Repo Rate.
15-Nov-2008 Eligible limit for ECR facility increased from 15 per cent to 50 per cent of outstanding export credit eligible for refi nance.
6-Dec-2008 Refi nance facility of `7,000 crore was provided to SIDBI at the Repo Rate. This facility was available up to March 31, 2010
11-Dec-2008 Refi nance facility of `4,000 crore was provided to the National Housing Bank at the Repo Rate. This facility was available up to March 31, 2010
11-Dec-2008 Refi nance facility of `5,000 crore was provided to the EXIM Bank at the Repo Rate. This facility was available up to March 31, 2013.
27-Oct-2009 The special refi nance facility introduced on November 03, 2008 was closed.
27-Oct-2009 Eligible limit of ECR facility reduced from 50 per cent of the outstanding rupee export credit eligible for refi nance to 15 per cent.
18-Jun-2012 Export Credit Refi nance limit increased to 50 per cent from 15 per cent of eligible outstanding export credit.
14-Jan-2013 INR-USD swap facility with the Reserve Bank was provided to SCBs (except RRBs) to support incremental Pre-shipment export credit in foreign currency, with the option to access rupee refi nance to the extent of swap with the RBI under Special Export Credit Refi nance Facility (SECRF). The scheme was closed on June 28, 2013.
18-Nov-2013 Refi nance facility of `5,000 crore was provided to SIDBI . This refi nance facility is be available up to November 13, 2014.
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
111
Appendix Table III.6: CPI-Combined (back-casted series*)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2001 55.5 55.4 55.7 56.1 56.5 57.1 57.8 58.2 58.0 58.6 59.0 58.8
2002 58.6 58.5 58.9 59.2 59.6 60.2 60.8 61.1 61.2 61.5 61.7 61.3
2003 61.2 61.4 61.8 62.7 62.8 63.0 63.5 63.1 63.2 63.7 63.8 63.7
2004 63.8 63.8 63.9 64.1 64.6 65.1 65.6 66.2 66.3 66.8 66.6 66.1
2005 66.6 66.6 66.6 67.1 66.7 66.8 67.9 68.1 68.2 68.8 69.5 69.2
2006 69.3 69.3 69.3 70.0 70.9 71.9 72.3 72.8 73.3 74.2 74.2 73.9
2007 73.9 74.1 74.1 74.8 75.2 75.8 76.9 77.2 77.3 77.9 78.0 78.0
2008 78.1 78.6 79.7 80.7 80.8 81.9 83.3 84.3 85.1 86.7 86.7 85.5
2009 85.9 85.8 86.1 87.0 87.9 88.9 92.0 92.9 93.6 94.6 96.5 96.7
2010 97.4 96.5 96.3 97.0 97.8 99.0 101.3 101.4 102.3 102.9 103.5 104.7
2011 105.9 105.3 105.6 106.2 107.1 108.8 110.5 111.7 113.0 113.8 114.1 113.6
2012 114.0 114.6 115.5 117.1 118.2 119.6 121.4 122.9 124.0 124.9 125.4 125.6
2013 126.3 127.1 127.5 128.1 129.2 131.4 133.1 134.6 136.2 137.5 139.5 138.0
*The new series of Consumer Price Index-Combined (CPI-C) (Base: 2010=100) is available on a monthly basis from January-2011. For the purpose of empirical analysis in this Report, back-casted data had to be generated, and the data presented here should not be seen as an offi cial price index. The back-casted series of CPI-C was generated by using the price indices of Consumer Price Index-Industrial Workers (CPI-IW) (Base: 2001=100) and applying the corresponding weighting diagram of CPI-C at sub-group level, with some minor adjustments.
112
Appendix Tables
Cou
ntry
Key
Pol
icy
Rate
H
ikes
Key
Pol
icy
Rate
C
uts
Liqu
idit
yM
easu
res
FX
inte
rven
tion
FX s
wap
sC
apit
al
acco
unt
man
agem
ent
Mac
ro-
prud
enti
al
mea
sure
s
Indo
nesi
aR
ates
wer
e hi
ked
in s
ever
al
stag
es b
y 17
5 bp
s.
Ass
uran
ce t
o pr
ovid
e do
mes
tic
liqui
dity
.A
ssur
ance
to
pro
vide
do
mes
tic
liqui
dity
.
Yes
Als
o a
spec
ial
swap
line
wit
h Ba
nk o
f K
orea
.
Allo
wed
m
ore
min
eral
ex
port
s;
easi
ng o
f ho
ldin
g pe
riod
re
stri
ctio
ns
to a
ttra
ct
infl o
ws.
Bank
In
done
sia
Dep
osit
C
erti
fi cat
es
adde
d as
a
com
pone
nt
of S
econ
dary
St
atut
ory
Rese
rves
; LTV
on
pro
pert
y lo
ans
rais
ed.
Thai
land
Cut
ove
rnig
ht
repo
rat
e by
25
bps
to 2
.5%
on
May
29,
201
3.
Sout
h K
orea
Yes
Swap
line
w
ith
Bank
In
done
sia.
Turk
eyC
ut r
equi
red
rese
rve
rati
os o
n fo
rex
depo
sits
to
boos
t m
arke
t liq
uidi
ty.
Trie
d us
ing
fore
x in
terv
enti
on
for
mon
etar
y po
licy
goal
s,
but
this
cou
ld
not
cont
ain
infl a
tion
.
Dou
bled
th
e am
ount
of
res
erve
s th
at b
anks
ar
e al
low
ed
to k
eep
in f
orei
gn
curr
ency
.
Fore
x re
serv
e ra
tio
requ
irem
ent
was
in
crea
sed.
App
endi
x Ta
ble
V.1
: Mea
sure
s A
imed
at
Man
agin
g th
e Im
pact
of
Tape
r Ta
lk
(Con
td...
)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
113
Cou
ntry
Key
Pol
icy
Rate
H
ikes
Key
Pol
icy
Rate
C
uts
Liqu
idit
yM
easu
res
FX
inte
rven
tion
FX s
wap
sC
apit
al
acco
unt
man
agem
ent
Mac
ro-
prud
enti
al
mea
sure
s
Russ
iaU
nder
took
liqu
idit
y m
anag
emen
t re
form
s.
Intr
oduc
ed 1
-wee
k te
rm r
epos
as
the
mai
n in
stru
men
t. 1
-day
rep
o to
be
disc
onti
nued
fr
om F
eb.1
, 201
4. W
ill
star
t us
ing
1-6
day
repo
as
fi ne-
tuni
ng
oper
atio
ns. I
ntro
duce
d st
andi
ng f
acili
ty.
Braz
ilH
iked
Sel
ic r
ate
150
bps
from
8.
0% t
o 9.
5%
duri
ng M
ay-O
ct.
2013
. Ear
lier
it h
ad r
aise
d Se
lic r
ate
75 b
ps
duri
ng Ja
n-A
pril
2013
.
On
Aug.
24
US$
54 b
n In
terv
enti
on
Plan
an
noun
ced
afte
r 15
%
depr
ecia
tion
of
rea
l in
thre
e m
onth
s.
Incl
uded
w
eekl
y au
ctio
n of
U
S$1
bn d
olla
r lo
ans.
US$
0.5
bn o
f fo
rex
swap
s fo
ur d
ays
a w
eek.
Rea
l ap
prec
iate
d 7.
7% d
urin
g Se
pt-O
ct.
2013
aid
ed b
y in
terv
enti
on
plan
but
ra
ised
the
co
st o
f it
s co
ntin
uati
on.
How
ever
, on
Nov
. 8, t
he
cent
ral b
ank
anno
unce
d ro
llove
r of
sw
aps
thus
in
crea
sing
its
inte
rven
tion
.
Rela
xed
capi
tal
infl o
ws.
Sc
rapp
ed
the
6% IO
F on
for
eign
po
rtfo
lio
infl o
ws
into
fi x
ed in
com
e in
vest
men
ts.
App
endi
x Ta
ble
V.1
: Mea
sure
s A
imed
at
Man
agin
g th
e Im
pact
of
Tape
r Ta
lk (C
oncl
d.)
114
Appendix Tables
Asi
an c
risi
s of
199
7-98
Rat
e M
easu
res
Incr
ease
in B
ank
Rat
e (t
o 11
per
cen
t) a
nd r
ever
se r
epo
rate
(to
9 pe
r ce
nt) b
y tw
o pe
rcen
tage
poi
nts
each
on
Janu
ary
16, 1
998.
Incr
ease
in in
tere
st r
ate
surc
harg
e on
ban
k cr
edit
for
impo
rts
to 3
0 pe
r ce
nt o
n Ja
nuar
y 16
, 199
8.
Hik
e in
the
inte
rest
rat
e on
pos
t-sh
ipm
ent
rupe
e ex
port
cre
dit
beyo
nd 9
0 da
ys a
nd u
p to
6 m
onth
s fr
om 1
3 pe
r ce
nt t
o 15
per
cen
t on
Nov
embe
r 26
, 199
7 (a
bri
ef p
erio
d of
sta
bilit
y in
end
-Dec
embe
r le
d to
wit
hdra
wal
of
the
hike
fro
m Ja
nuar
y 1,
199
8).
On
Dec
embe
r 17
, 199
7 it
was
sti
pula
ted
that
the
min
imum
inte
rest
rat
e of
20
per
cent
per
ann
um to
be
char
ged
on o
verd
ue e
xpor
t bi
lls. A
n in
tere
st r
ate
surc
harg
e of
15
per
cent
on
impo
rt c
redi
t w
as a
lso
anno
unce
d.
Qua
ntit
y M
easu
res
CRR
was
rai
sed
twic
e in
Dec
embe
r 19
97 (b
y 50
bps
to
10 p
er c
ent
and
the
incr
emen
tal 1
0 pe
r ce
nt C
RR o
n N
RE a
nd N
RNR
depo
sit
sche
mes
was
wit
hdra
wn)
and
Jan
uary
199
8 (b
y 50
bps
to
10.5
per
cen
t). T
his
was
inte
nded
to
abso
rb e
xces
s liq
uidi
ty a
nd r
emov
e th
e ar
bitr
age
on a
ccou
nt o
f lo
w r
ates
in t
he c
all m
oney
mar
ket
and
the
pote
ntia
l gai
ns in
the
for
eign
exc
hang
e m
arke
t.
Redu
ctio
n in
acc
ess
to r
efi n
ance
fac
iliti
es (g
ener
al r
efi n
ance
lim
it r
educ
ed f
rom
1.0
per
cen
t to
0.2
5 pe
r ce
nt o
f fo
rtni
ghtl
y av
erag
e ou
tsta
ndin
g ag
greg
ate
depo
sits
in
1996
-97
and
expo
rt r
efi n
ance
lim
it r
educ
ed f
rom
100
per
cen
t to
50
per
cent
of
the
incr
ease
in
outs
tand
ing
expo
rt c
redi
t ov
er F
ebru
ary
16, 1
996)
.
Glo
bal fi
nan
cial
cri
sis
of 2
008-
09
Rat
e M
easu
res
Cut
in t
he r
epo
rate
und
er t
he L
AF
by a
cum
ulat
ive
425
bps
from
9.0
per
cen
t to
4.7
5 pe
r ce
nt.
Cut
in t
he r
ever
se r
epo
rate
by
a cu
mul
ativ
e 27
5 bp
s fr
om 6
.0 p
er c
ent
to 3
.25
per
cent
.
The
ceili
ng r
ate
on e
xpor
t cr
edit
in f
orei
gn c
urre
ncy
incr
ease
d to
LIB
OR
plus
350
bps
.
Cum
ulat
ive
incr
ease
in th
e in
tere
st r
ate
ceili
ngs
on F
CN
R(B)
and
NR(
E)RA
term
dep
osit
s by
175
bps
eac
h si
nce
Sept
embe
r 16
, 200
8.
Qua
ntit
y M
easu
res
Cut
in t
he C
RR b
y a
cum
ulat
ive
400
bps
of N
DTL
fro
m 9
.0 p
er c
ent
to 5
.0 p
er c
ent.
Intr
oduc
tion
of a
spe
cial
refi
nan
ce fa
cilit
y up
to M
arch
31,
201
0 un
der
whi
ch a
ll SC
Bs (e
xclu
ding
RRB
s) p
rovi
ded
refi n
ance
from
the
Rese
rve
Bank
equ
ival
ent
to 1
.0 p
er c
ent
of e
ach
bank
’s N
DTL
as
on O
ctob
er 2
4, 2
008.
Term
rep
o fa
cilit
y un
der
the
LAF
to e
nabl
e ba
nks
to e
ase
liqui
dity
str
ess
face
d by
mut
ual
fund
s, N
BFC
s an
d ho
usin
g fi n
ance
co
mpa
nies
(HFC
s) w
ith
asso
ciat
ed S
LR e
xem
ptio
n of
1.5
per
cen
t of
ND
TL. T
his
faci
lity
is a
vaila
ble
up t
o M
arch
31,
201
0.
Redu
ctio
n in
sta
tuto
ry l
iqui
dity
rat
io (
SLR)
fro
m 2
5 pe
r ce
nt t
o 24
per
cen
t of
ND
TL w
ith
effe
ct f
rom
the
for
tnig
ht b
egin
ning
N
ovem
ber
8, 2
008.
Intr
oduc
tion
of
a m
echa
nism
to
buyb
ack
date
d se
curi
ties
issu
ed u
nder
the
MSS
.
Exte
nsio
n of
the
peri
od o
f ent
itle
men
t by
90 d
ays
of th
e fi r
st s
lab
of p
re-s
hipm
ent a
nd p
ost-
ship
men
t rup
ee e
xpor
t cre
dit w
ith
effe
ct
from
Nov
embe
r 15
, 200
8 an
d N
ovem
ber
28, 2
008,
res
pect
ivel
y.
Incr
ease
in
the
elig
ible
lim
it o
f th
e EC
R fa
cilit
y fo
r sc
hedu
led
bank
s (e
xclu
ding
RRB
s) f
rom
15
per
cent
to
50 p
er c
ent
of t
he
outs
tand
ing
expo
rt c
redi
t el
igib
le f
or r
efi n
ance
.
App
endi
x Ta
ble
V.2
: Mon
etar
y M
easu
res
to A
ddre
ss E
xcha
nge
Mar
ket
Pres
sure
s
(Con
td...
)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
115
In o
rder
to
prov
ide
liqui
dity
sup
port
to
hous
ing,
exp
ort
and
MSE
sec
tors
, RBI
pro
vide
d a
refi n
ance
fac
ility
to
NH
B, E
XIM
Ban
k an
d SI
DBI
up
to M
arch
201
0.
Scop
e of
OM
O w
iden
ed b
y in
clud
ing
purc
hase
s of
gov
ernm
ent
secu
riti
es t
hrou
gh a
n au
ctio
n-ba
sed
mec
hani
sm.
Spec
ial m
arke
t op
erat
ions
to
mee
t th
e fo
reig
n ex
chan
ge r
equi
rem
ents
of
publ
ic s
ecto
r oi
l mar
keti
ng c
ompa
nies
aga
inst
oil
bond
s.
HFC
s re
gist
ered
wit
h th
e N
HB
wer
e al
low
ed t
o ra
ise
shor
t-ter
m f
orei
gn c
urre
ncy
borr
owin
gs u
nder
the
app
rova
l rou
te, s
ubje
ct t
o co
mpl
ianc
e w
ith
prud
enti
al n
orm
s la
id d
own
by t
he N
HB.
AD
s al
low
ed to
bor
row
fund
s fr
om th
eir
head
offi
ce,
ove
rsea
s br
anch
es a
nd c
orre
spon
dent
s an
d ov
erdr
afts
in n
ostr
o ac
coun
ts u
p to
a
limit
of
50 p
er c
ent
of t
heir
uni
mpa
ired
Tie
r 1
capi
tal o
r U
S$ 1
0 m
illio
n, w
hich
ever
was
hig
her.
A fo
reig
n ex
chan
ge s
wap
faci
lity
wit
h te
nure
up
to th
ree
mon
ths
to In
dian
pub
lic a
nd p
riva
te s
ecto
r ban
ks h
avin
g ov
erse
as o
pera
tion
s in
ord
er t
o pr
ovid
e th
em fl
exib
ility
in m
anag
ing
thei
r sh
ort-t
erm
fun
ding
req
uire
men
ts a
t th
eir
over
seas
offi
ces
.
Syst
emic
ally
im
port
ant
non-
depo
sit
taki
ng N
BFC
s w
ere
perm
itte
d to
rai
se s
hort
-ter
m f
orei
gn c
urre
ncy
borr
owin
gs u
nder
the
ap
prov
al r
oute
, sub
ject
to
com
plia
nce
wit
h th
e pr
uden
tial
req
uire
men
ts o
f ca
pita
l ade
quac
y an
d ex
posu
re n
orm
s.
Exch
ange
mar
ket p
ress
ures
sin
ce M
ay 2
2 in
res
pons
e to
talk
of t
aper
ing
Rat
e M
easu
res
MSF
was
rai
sed
by 2
00 b
ps t
o 10
.25
per
cent
(rev
erse
d by
Oct
ober
29,
201
3).
Inte
rest
rat
e ce
iling
on
NRI
dep
osit
s of
3-5
yea
rs m
atur
ity
was
incr
ease
d by
100
bps
to
LIBO
R/SW
AP
plus
400
bps
.
The
ceili
ng o
n in
tere
st r
ate
on N
RE d
epos
its
rem
oved
.
Qua
ntit
y M
easu
res
Rest
rict
ion
on t
he o
vera
ll ac
cess
to
LAF
to 0
.5 p
er c
ent
of e
ach
bank
’s N
DTL
.
OM
O s
ales
of `2
5 bi
llion
.
CRR
, w
hich
ban
ks h
ad t
o m
aint
ain
on a
for
tnig
htly
ave
rage
bas
is s
ubje
ct t
o a
daily
min
imum
req
uire
men
t of
70
per
cent
, w
as
mod
ifi ed
req
uiri
ng b
anks
to
mai
ntai
n a
daily
min
imum
of
99 p
er c
ent
of t
he r
equi
rem
ent
(red
uced
late
r to
95
per
cent
).
Auct
ion
of C
MBs
on
a w
eekl
y ba
sis
of a
not
ifi ed
am
ount
of `2
20 b
illio
n fo
r a
few
wee
ks.
Wit
h ef
fect
fro
m f
ortn
ight
beg
inni
ng A
ugus
t 24
, 201
3, in
crem
enta
l FC
NR
(B)
and
NRE
dep
osit
s, o
f th
ree
year
and
abo
ve m
atur
ity,
w
ere
exem
pted
fro
m m
aint
enan
ce o
f C
RR a
nd S
LR. T
his
mea
sure
was
ann
ounc
ed to
giv
e im
petu
s to
ban
ks to
mop
up
NRI
dep
osit
s of
long
-term
mat
urit
y.
On
Augu
st 2
8, 2
013,
a f
orex
sw
ap w
indo
w w
as o
pene
d to
mee
t th
e en
tire
dai
ly d
olla
r re
quir
emen
ts o
f th
ree
publ
ic s
ecto
r oi
l m
arke
ting
com
pani
es.
On
Sept
embe
r 4
2013
, RB
I op
ened
a s
peci
al c
once
ssio
nal
win
dow
for
sw
appi
ng f
resh
FC
NR(
B) d
olla
r de
posi
ts,
mob
ilise
d fo
r a
min
imum
teno
r of
thre
e ye
ars
and
abov
e at
a fi
xed
rate
of
3.5
per
cent
per
ann
um f
or th
e te
nor
of th
e de
posi
t (up
to N
ovem
ber
30,
2013
).
The
exis
ting
ove
rsea
s bo
rrow
ing
limit
of
50 p
er c
ent
of t
he u
nim
pair
ed T
ier
I ca
pita
l w
as a
lso
rais
ed t
o 10
0 pe
r ce
nt a
nd t
he
borr
owin
gs m
obili
sed
coul
d be
sw
appe
d w
ith
RBI
at a
con
cess
iona
l rat
e of
100
bps
bel
ow t
he o
ngoi
ng s
wap
rat
e pr
evai
ling
in t
he
mar
ket
(up
to N
ovem
ber
30, 2
013)
.
App
endi
x Ta
ble
V.2
: Mon
etar
y M
easu
res
to A
ddre
ss E
xcha
nge
Mar
ket
Pres
sure
s (C
oncl
d.)
116
Appendix Tables
App
endi
x Ta
ble
V.3
: Cou
nter
-Cyc
lica
l Pru
dent
ial R
egul
atio
n: V
aria
tion
s in
Ris
k W
eigh
ts a
nd P
rovi
sion
ing
Requ
irem
ents
Dat
eC
apit
al M
arke
tH
ousi
ngO
ther
Ret
ails
Com
mer
cial
Re
al E
stat
eN
on-D
epos
it t
akin
g Sy
stem
ical
ly
Impo
rtan
t N
on-B
anki
ng
Fina
ncia
l Com
pani
es
Risk
W
eigh
tPr
ovis
ions
(%
)Ri
sk
Wei
ght
Prov
isio
ns
(%)
Risk
W
eigh
tPr
ovis
ions
(%
)Ri
sk
Wei
ght
Prov
isio
ns
(%)
Risk
W
eigh
tPr
ovis
ions
(%
)
Dec
-200
410
00.
2575
0.25
125
0.25
100
0.25
100
0.25
Jul-2
005
125
0.25
750.
2512
50.
2512
50.
2510
00.
25N
ov-2
005
125
0.40
750.
4012
50.
4012
50.
4010
00.
40M
ay-2
006
125
1.00
751.
0012
51.
0015
01.
0010
00.
40Ja
n-20
0712
52.
0075
1.00
125
2.00
150
2.00
125
2.00
May
-200
712
52.
0050
-75
1.00
125
2.00
150
2.00
125
2.00
May
-200
812
52.
0050
-100
1.00
125
2.00
150
2.00
125
2.00
Nov
-200
812
50.
4050
-100
0.40
125
0.40
100
0.40
100
0.40
Nov
-200
912
50.
4050
-100
0.40
125
0.40
100
1.00
100
0.40
Dec
-201
012
50.
4050
-125
0.4-
2.0#
125
0.40
100
1.00
100
0.40
Jul-2
011
125
0.40
50-1
250.
4-2.
012
50.
4010
01.
0010
00.
40Ju
l-201
212
50.
4050
-125
0.4-
2.0
125
0.40
100
1.00
100
0.40
Jul-2
013
125
0.40
50-7
5*0.
4-2.
012
50.
4010
0@1.
0010
00.
40
* Th
e ri
sk w
eigh
ts f
or h
ousi
ng lo
ans
vary
acc
ordi
ng t
o am
ount
of
the
loan
and
the
loan
-to-v
alue
rat
io a
s be
low
.
# P
rovi
sion
ing
requ
irem
ent
for
hous
ing
loan
s w
ith
teas
er in
tere
st r
ates
was
incr
ease
d to
2.0
per
cen
t in
Dec
embe
r 20
10. I
t re
mai
ned
at t
wo
per
cent
till
on
e ye
ar a
fter
res
et o
f in
tere
st r
ate
to h
ighe
r ra
te a
nd t
here
afte
r it
was
0.4
per
cen
t. F
or o
ther
hou
sing
loan
s, t
he p
rovi
sion
ing
rem
aine
d at
0.4
per
cen
t.
@: A
s pe
r th
e D
BOD
Cir
cula
r N
o.D
BOD
.BP.
BC.N
o. 1
04 d
ated
June
21,
201
3, a
new
sub
sect
or c
alle
d 'C
omm
erci
al R
eal E
stat
e-Re
side
ntia
l Hou
sing
(CRE
-RH
)' ha
s be
en c
arve
d ou
t of
CRE
and
thi
s se
gmen
t at
trac
ts a
low
er r
isk
wei
ght
of 7
5 pe
r ce
nt a
nd lo
wer
sta
ndar
d as
set
prov
isio
ning
of
0.75
per
cen
t.
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
117
Item
Aug
ust
1995
to
Mar
ch 1
996
(Mex
ican
Cri
sis)
Aug
ust
1997
- A
ugus
t 19
98 (E
ast
Asi
an C
risi
s)
Hig
h C
apit
al fl
ow
duri
ng 2
003-
04 t
o 20
07-0
8
Glo
bal C
risi
s:
2008
-09
Sinc
e M
ay 2
013
FCN
R (B
) &
NRE
Fore
ign
curr
ency
de
posi
ts li
ke
FCN
R(B)
and
N
R(N
R) R
D w
ere
exem
pted
fro
m
CRR
req
uire
men
ts.
Incr
ease
in in
tere
st
rate
s on
NRE
de
posi
ts.
Rem
oval
of
incr
emen
tal C
RR o
f 10
per
cen
t on
N
RERA
and
NR(
NR)
de
posi
ts.
Redu
ctio
n in
in
tere
st r
ate
ceili
ng
on F
CN
R(B)
and
N
R(E)
RA d
epos
its.
Incr
ease
in in
tere
st
rate
cei
ling
on
FRN
R (B
) and
NRE
de
posi
ts.
Sepa
rate
con
cess
iona
l sw
ap
win
dow
to
attr
act
FCN
R(B)
do
llar
fund
s.
Exem
ptio
n fr
om m
aint
enan
ce o
f C
RR
an
d SL
R o
n i
ncr
emen
tal
FCN
R (B
) de
posi
ts a
s al
so N
RE
depo
sits
wit
h re
fere
nce
to b
ase
date
of J
uly
26, 2
013,
and
hav
ing
mat
urit
y of
thre
e ye
ars a
nd a
bove
.
Der
egul
atio
n of
int
eres
t ra
te o
n N
RE d
epos
its.
Incr
ease
in
inte
rest
rat
e ce
iling
by
100
bps
to
LIBO
R/ S
WA
P pl
us
400
bps
on F
CN
R(B)
dep
osit
s of
m
atur
ity
3 to
5 y
ears
.
ECB
and
trad
e cr
edit
Rela
xati
on in
the
EC
B no
rms.
Incr
easi
ng t
he
exis
ting
lim
it f
or
prep
aym
ent
of
exte
rnal
co
mm
erci
al
borr
owin
gs (E
CBs
) w
itho
ut t
he R
BI’s
ap
prov
al f
rom
U
S$ 4
00 m
illio
n to
U
S$ 5
00 m
illio
n,
subj
ect
to
com
plia
nce
wit
h th
e m
inim
um
Rela
xati
on in
EC
B po
licy
in t
erm
s of
up
war
d re
visi
on in
al
l-in-
cost
cei
ling,
el
igib
le b
orro
wer
s an
d en
d us
e.
ECB
allo
wed
for
re
paym
ent
of
outs
tand
ing
rupe
e
loan
tow
ards
ca
pita
l ex
pend
itur
e, u
nder
ap
prov
al r
oute
.
Expa
nsio
n of
elig
ible
end
use
of
ECB
to in
clud
e im
port
of
serv
ices
, tec
hnic
al k
now
-how
an
d pa
ymen
t of
lice
nse
fees
as
part
of
impo
rt o
f ca
pita
l goo
ds,
subj
ect
to c
erta
in c
ondi
tion
s.
Avai
lmen
t of
EC
B fo
r w
orki
ng
capi
tal f
or c
ivil
avia
tion
sec
tor.
Exte
nsio
n of
sch
eme
for
Buyb
ack
/ Pre
paym
ent
of F
CC
Bs
unde
r th
e ap
prov
al r
oute
, up
to
Dec
embe
r 31
,201
3.
App
endi
x Ta
ble
V.4
: Cap
ital
Con
trol
Mea
sure
s Ta
ken
to A
ddre
ss E
xcha
nge
Mar
ket
Vol
atil
ity
(Con
td...
)
118
Appendix Tables
Item
Aug
ust
1995
to
Mar
ch 1
996
(Mex
ican
Cri
sis)
Aug
ust
1997
- A
ugus
t 19
98 (E
ast
Asi
an C
risi
s)
Hig
h C
apit
al fl
ow
duri
ng 2
003-
04 t
o 20
07-0
8
Glo
bal C
risi
s:
2008
-09
Sinc
e M
ay 2
013
aver
age
mat
urit
y pe
riod
.In
trod
ucti
on o
f Fo
reig
n C
urre
ncy
Exch
ange
able
bo
nds.
All-
in-c
ost
ceili
ng
for
trad
e cr
edit
s w
ith
mat
urit
y up
to
one
yea
r an
d be
twee
n on
e an
d th
ree
year
s ha
s be
en r
evis
ed t
o 35
0 bp
s ab
ove
6-m
onth
LIB
OR
.
Avai
lmen
t of
EC
B fo
r fi n
anci
ng
3G s
pect
rum
out
stan
ding
rup
ee
loan
.
Avai
lam
ent
of E
CB
by N
BFC
- A
sses
Fin
ance
com
pani
es.
ECB
rais
ed u
nder
the
app
rova
l ro
ute
from
for
eign
equ
ity
hold
er c
ompa
ny w
ith
min
imum
av
erag
e m
atur
ity
of s
even
yea
rs
allo
wed
to
use
for
gene
ral
corp
orat
e pu
rpos
es, s
ubje
ct t
o th
e ce
rtai
n co
ndit
ions
.
FII
Ban
on u
se o
f Pr
omis
sory
Not
es.
Lock
-in p
erio
d of
lo
ng t
erm
in
fras
truc
ture
bo
nds
for
FIIs
was
re
duce
d to
one
ye
ar.
Cei
ling
for
FIIs
in
vest
men
t in
G
-sec
and
co
rpor
ate
bond
s ra
ised
by
US$
5
billi
on e
ach
to U
S$
20 b
illio
n an
d U
S$
45 b
illio
n re
spec
tive
ly.
Enha
nce
the
limit
for
for
eign
in
vest
men
t in
Gov
ernm
ent
date
d se
curi
ties
by
US$
5 b
illio
n to
US$
30
billi
on. E
nhan
ced
limit
is a
vaila
ble
only
for
long
te
rm in
vest
ors
regi
ster
ed w
ith
SEBI
(Sov
erei
gn W
ealt
h Fu
nds
(SW
Fs),
Mul
tila
tera
l Age
ncie
s,
Pens
ion/
Insu
ranc
e/
Endo
wm
ent
Fund
s, F
orei
gn
Cen
tral
Ban
ks).
App
endi
x Ta
ble
V.4
: Cap
ital
Con
trol
Mea
sure
s Ta
ken
to A
ddre
ss E
xcha
nge
Mar
ket
Vol
atil
ity
(Con
td.)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
119
Item
Aug
ust
1995
to
Mar
ch 1
996
(Mex
ican
Cri
sis)
Aug
ust
1997
- A
ugus
t 19
98 (E
ast
Asi
an C
risi
s)
Hig
h C
apit
al fl
ow
duri
ng 2
003-
04 t
o 20
07-0
8
Glo
bal C
risi
s:
2008
-09
Sinc
e M
ay 2
013
Oth
ers
Floa
ting
of
Resu
rgen
t In
dia
Bond
s.
Ban
on u
se o
f of
fsho
re d
eriv
ativ
e pr
oduc
ts.
Ban
on o
vers
eas
indi
vidu
al t
o pa
rtic
ipat
e in
In
dian
sto
ck
mar
ket.
Rupe
e D
olla
r Sw
ap
Faci
lity.
To c
onve
rt 1
0 pe
r ce
nt o
f th
e ba
lanc
es in
the
EE
FC a
ccou
nts.
Qua
lifi e
d Fo
reig
n In
vest
ors
(QFI
s)
allo
wed
to
inve
st
in m
utua
l fun
ds.
Broa
deni
ng o
f in
vest
or b
ase
for
G-s
ec t
o in
clud
e So
vere
ign
Wea
lth
Fund
s, in
sura
nce
fund
s an
d pe
nsio
n fu
nds.
Incr
ease
d in
ov
erse
as b
orro
win
g lim
its
for
bank
s fr
om 2
5 pe
r ce
nt t
o 50
per
cen
t of
Ti
er-I
capi
tal o
r U
S$ 1
0 m
illio
n,
whi
chev
er is
hi
gher
.
Incr
ease
in o
vers
eas
borr
owin
g lim
its
for
bank
s fr
om 5
0 pe
r ce
nt t
o 10
0 pe
r ce
nt o
f Ti
er-I
capi
tal.
Incr
ease
in o
vers
eas
borr
owin
g lim
its
for
bank
s fr
om 5
0 pe
r ce
nt t
o 10
0 pe
r ce
nt o
f Ti
er-I
capi
tal o
r U
S$ 1
0 m
illio
n,
whi
chev
er is
hig
her.
App
endi
x Ta
ble
V.4
: Cap
ital
Con
trol
Mea
sure
s Ta
ken
to A
ddre
ss E
xcha
nge
Mar
ket
Vol
atil
ity
(Con
td.)
120
Appendix Tables
Item
Aug
ust
1995
to
Mar
ch 1
996
(Mex
ican
Cri
sis)
Aug
ust
1997
- A
ugus
t 19
98 (E
ast
Asi
an C
risi
s)
Hig
h C
apit
al fl
ow
duri
ng 2
003-
04 t
o 20
07-0
8
Glo
bal C
risi
s:
2008
-09
Sinc
e M
ay 2
013
Out
fl ow
sLi
mit
on
ou
twar
d F
DI
incr
ea
se
d gr
adua
lly to
400
per
ce
nt o
f the
thei
r net
w
orth
un
der
th
e au
tom
atic
rou
te.
Gra
dual
incr
ease
in
limit
of
outw
ard
port
folio
in
vest
men
ts b
y lis
ted
com
pani
es
to 5
0 pe
r ce
nt o
f th
e ne
t w
orth
and
di
spen
sing
wit
h th
e re
quir
emen
t of
10
per
cen
t re
cipr
ocal
sha
re
hold
ing
in t
he
liste
d In
dian
co
mpa
nies
by
over
seas
co
mpa
nies
.
Enha
ncem
ent
in
limit
on
over
seas
in
vest
men
t by
m
utua
l fun
ds
regi
ster
ed w
ith
the
SEBI
to
US$
7
billi
on.
Redu
ctio
n in
the
lim
it o
f ou
twar
d FD
I fro
m 4
00 p
er c
ent
to 1
00 p
er c
ent
of n
et w
orth
of
Indi
an c
ompa
ny, u
nder
Au
tom
atic
Rou
te.
Redu
ctio
n in
lim
it o
f U
S$ 2
00,0
00 p
er fi
nanc
ial y
ear
to U
S$ 7
5,00
0 pe
r fi n
anci
al y
ear
unde
r Li
bera
lized
Rem
itta
nce
Sche
mes
.
App
endi
x Ta
ble
V.4
: Cap
ital
Con
trol
Mea
sure
s Ta
ken
to A
ddre
ss E
xcha
nge
Mar
ket
Vol
atil
ity
(Con
td.)
Report of The Expert Committee to Revise and Strengthen the Monetary Policy Framework
121
App
endi
x Ta
ble
V.4
: Cap
ital
Con
trol
Mea
sure
s Ta
ken
to A
ddre
ss E
xcha
nge
Mar
ket
Vol
atil
ity
(Con
cld.
)
Item
Aug
ust
1995
to
Mar
ch 1
996
(Mex
ican
Cri
sis)
Aug
ust
1997
- A
ugus
t 19
98 (E
ast
Asi
an C
risi
s)
Hig
h C
apit
al fl
ow
duri
ng 2
003-
04 t
o 20
07-0
8
Glo
bal C
risi
s:
2008
-09
Sinc
e M
ay 2
013
Enha
ncem
ent
of
limit
on
over
seas
in
vest
men
t un
der
the
Libe
ralis
ed
Rem
itta
nce
Sche
me
(LRS
) for
re
side
nt
indi
vidu
als.
Inte
rest
pay
men
t of
EEF
C a
ccou
nts
to t
he e
xten
t of
ou
tsta
ndin
g ba
lanc
es o
f U
S$ 1
m
illio
n pe
r ex
port
ers
(tem
pora
ry
mea
sure
, val
id u
p to
Oct
31,
201
8.
Faci
lity
clos
ed o
n N
ov 1
, 201
8.
