Assessing inflation and output variability using a New Keynesian model: An application to Egypt

Inflation targeting (IT) is one of the operational frameworks for monetary policy aimed at attaining price stability. In contrast to alternative strategies, notably money or exchange rate targeting, which seek to achieve low and stable inflation through targeting intermediate variables – for example, the growth rate of money aggregates or the level of the exchange rate of an ‘anchor’ currency – IT involves targeting inflation directly.