IMF-乌兹别克斯坦向通胀目标过渡（英）-2022.11-27正式版

Uzbekistan:TransitiontoInflationTargetingMoayadAlRasasiandEzequielCabezonWP/22/229IMFWorkingPapersdescriberesearchinprogressbytheauthor(s)andarepublishedtoelicitcommentsandtoencouragedebate.TheviewsexpressedinIMFWorkingPapersarethoseoftheauthor(s)anddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement.2022NOV©2022InternationalMonetaryFund WP/22/229IMFWorkingPaperMiddleEastandCentralAsiaDepartmentUzbekistan’sTransitiontoInflationTargetingPreparedbyMoayadAlRasasiandEzequielCabezonAuthorizedfordistributionbyRonvanRoodenNovember2022IMFWorkingPapersdescriberesearchinprogressbytheauthor(s)andarepublishedtoelicitcommentsandtoencouragedebate.TheviewsexpressedinIMFWorkingPapersarethoseoftheauthor(s)anddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement.ABSTRACT:Uzbekistanhassignificantlyimproveditsmonetarypolicyframeworkduring2017-21.Nevertheless,thetransitiontoinflationtargetingischallengingasthecountryisgoingthroughaperiodofdeepstructuralreforms.Therefore,theCentralBankofUzbekistan(CBU)willhavetomonitorstructuralreformsandcalibratemonetarypolicyaccordingly.Thispaperidentifiesinstitutionalandstructuralgaps,andassessestheeffectivenessofmonetarypolicytransmission.InstitutionalgapsareassessedusinginstitutionalindexeswhiletransmissionisassessedusingVARs.Itconcludesthatinthecomingyears,reformswillneedtocontinue,tofurtherimprovetheCBU’sgovernanceandindependence,developfinancialmarkets,butmostofalltoreducethestilllargefootprintofthestateinthefinancialsectoraswellasintheoveralleconomy.RECOMMENDEDCITATION:MoayadAlRasasi&EzequielCabezon,2022."Uzbekistan’sTransitiontoInflationTargeting,"IMFWorkingPapers2022/229,InternationalMonetaryFund.JELClassificationNumbers:E31,E40,E52,E58Keywords:Uzbekistan;Inflationtargeting;MonetarypolicyAuthor’sE-MailAddress:ecabezon@;malrasasi@*“Theauthor(s)wouldliketothank”footnote,asapplicable.WORKINGPAPERSUzbekistan’sTransitiontoInflationTargetingPreparedbyMoayadAlRasasiandEzequielCabezon1“WewouldliketoextendoursincereappreciationtoRonvanRoodenforhisguidance,supportandencouragementtopursuethisproject.WealsowouldliketothankChristenRichmondforthediscussionontheearlydraftofthepaperandthestaffoftheCentralBankofUzbekistaninparticulartoNodirAchilov,BehzodHamraev,andBobirAbubakirov.WealsoacknowledgeveryusefuldiscussionwithKevinRoss,GalinaKostina,LawrenceDwight,SubirLall,DarrylKind,MarcoCasiraghi,StephenMulena,KellyEcklhold,AltynaiAidarova,ManmohanSingh,FrancescoGrigoli,andparticipantsattheMCDDiscussion.IMFWORKINGPAPERS TitleofWPContentsThetransitionin2017-21 3Background 3ITFramework:GeneralConsiderations 3ImprovementsinUzbekistan’sMonetaryPolicyFramework2017-21 4MonetaryPolicyOutcomesinUzbekistan 7AssessingInstitutionsandTransmission 9AssessingPreconditions 9InstitutionalPreconditionsFocus 11TransmissionMechanismPreconditionsFocus 12ChallengesandRecommendations 16IncreasingCredibility 16ImprovingTransmissionofMonetaryPolicy 17Conclusion 19AnnexI.DetailofInflationTargetingConditions 20References 23BOXES1.InflationDevelopments 82.SelectedInterestRates 143.VARImpulseResponses 16FIGURES1.EconomicIndicatorsPreandPostInflationTargetingImplementation 103.ElasticityofInterestRatetoMonetaryPolicyRates 144.CountryExperienceswithDollarizationPoliciesandMeasures 18TABLESTable1.EconomicIndicatorsPreandPostInflationTargetingImplementation 10Table2.ModifiedCukiermanIndexofCentralBankIndependence 11Table3.EffectofMonetaryPolicyRatesonRetailInterestRates 14Table4.CountryExperienceswithDollarizationPoliciesandMeasures 18INTERNATIONALMONETARYFUND2IMFWORKINGPAPERS TitleofWPThetransitionin2017-21BackgroundUzbekistanhasbeenworkingtoimproveitsinstitutionalandpolicyframeworktobeabletofullyimplementinflationtargetingby2023.Priorto2017,monetarypolicywassubordinatedtoanexchangeratepeg.InSeptember2017,theCentralBankofUzbekistan(CBU)adoptedanewapproach,andmonetarypolicywasfocusedonachievingpricestability.Importantly,theCBUwasremovedfromthelistofstatebodiesthatareunderthecontrolofthegovernment,pavingthewayforgreateroperationalindependencefortheCBU.Also,restrictionsonaccesstoforeignexchangewereabolished,resultingina50percentdepreciationoftheofficialexchangerateandunifyingtheexchangerate.TheIMFprovidedconsiderabletechnicalassistancetosupporttheCBU1.AnewcentralbanklawwasenactedinOctober2019,settingpricestabilityexplicitlyastheprimarygoalofmonetarypolicyandtheCBUstartedtransitioningtoaninflationtargeting(IT)regime.ThispaperassessestheCBU’sprogressintransitioningtoITandaimstoidentifyremaininginstitutionalandstructuralgaps,includingthroughanassessmentoftheeffectivenessofthemonetarypolicytransmissionmechanism.ThetransitiontoinflationtargetingischallengingasUzbekistanisstillundergoingdeepstructuralreforms.Since2017,theauthoritieshaveembarkedonanambitiousreformagendathatincludedliberalizingforeigntrade,prices,andtheexchangemarket,reforminggovernmentoperationsandthetaxsystem2,andcreatingreliablestatistics.Duringthetransitionfromaplanningtoamarketeconomy,inadditiontotraditionaldemand-pullandcost-pushinflationarypressures,otherstructuralfactorsalsoaffectedinflation(Sløk,2000).Forinstance,priceliberalizationandtherelativepriceadjustmentsthatfollowfeedinflation.Similarly,rigiditiesingoodsandlabormarketsandtheindexationofpriceshavetendedtocontributetohigherinflationintransitioneconomies.Finally,pricesgrowwithincomes(theso-calledBalassa-Samuelsoneffect).Accordingly,themonetaryauthoritieshavetoestimatethecontributionofthesedriversofinflation,althoughthisiscomplicatedbythelackofpredictablerelationshipsbetweeneconomicvariablesduetothestructuralchanges.Asaresult,implementingITinatransitioneconomycanbeparticularlychallenging.TheUzbekauthoritiesareworkingtodevelopmarketinstitutions,fostercompetition,andreducethestilllargefootprintofthegovernmentontheeconomy.Limitedcompetition,alackofmarketculture,andalargefootprintofgovernmentarealsoobservedinfinancialmarkets,includingtheforeignexchangemarket,theinterbankmarket,andthebankingsystem.InternationalexperiencesuggeststhatitiskeytoadvancefinancialsectorreformsinordertobeabletobesuccessfulinimplementingIT.ITFramework:GeneralConsiderationsInflationTargeting(IT)hasbecomeapopularoperationalframeworkforcentralbankstoachievepricestability.Contrastingtoothermonetaryframeworks,seekingtomaintainlowandstableinflationindirectlybytargetingintermediatevariablessuchasmonetaryaggregatesortheexchangerate,ITentailstargetinginflationdirectlyandexplicitly.IThasbeenadoptedby41countries–includingthreeintheCaucasusandCentralAsia3(IMF,2020).Inthesecountries,whichincludeadvancedandemergingmarkets,IThasfosteredbettermacroeconomicconditionscomparedtocountrieswithothermonetaryframeworks(IMF2006,Roger2009).Thegeneralpreconditionsforinflationtargetinginclude:institutionalindependence,stablemacroeconomicfundamentals,well-developedanalyticalcapabilities,andahealthyfinancialsystem.November2017,February2018,February2019,September2020,andDecember2021.In2019,majortaxreformswereintroducedtopromoteprivatesectorgrowth.ThesecountriesareArmenia,Georgia,andKazakhstan.However,Azerbaijan,KyrgyzRepublicandUzbekistanaretransitioningtoIT.INTERNATIONALMONETARYFUND3IMFWORKINGPAPERS TitleofWPLaurensetal.(2015)emphasizetheimportanceofmeetingtherequiredpreconditionstobeabletoadoptafull-fledgedITregimetoavoidunfavorableoutcomes.SomestudieshavehighlightedadditionalpreconditionsforsuccessfulITimplementation.Forexample,RogerandStone(2005),Walsh(2009),andFreedmanandOtker-Robe(2009and2010)emphasizedthatestablishinganeffectiveandaclearmonetarypolicyinstrumentisessentialforthesuccessofIT.BatiniandLaxton(2005)stressedtheneedforaclearunderstandingofthetransmissionmechanismandbuildingeconomicdatabases.AsurveystudybytheIMF(2006)indicatedtheimportanceofreducingthelevelofdollarizationinthefinancialsectortostrengthentheeffectivenessofmonetarypolicytransmissionduringthetransitiontowardIT.TherearefivemainelementsforaninflationtargetingframeworkasdocumentedbyHammond(2012).Theseessentialelementsare:(i)settingpricestabilityexplicitlyastheprimaryobjectiveofmonetarypolicy;(ii)thepublicannouncementofnumericalinflationtargets;(iii)aninformativemonetarypolicystrategyforsettingpolicyinstrumentsbasedonabroadsetofinformation,includinginflationforecasts;(iv)atransparentmonetarypolicystrategythatcommunicatesmonetarypolicyplans,objectives,andtherationaleofdecisionstothepublic;and(v)enhancedaccountabilityintheconductandevaluationofmonetarypolicyactions.IMF(2015)alsohighlightstheimportanceoftheseelementsthatcharacterizeaneffectivepolicyframeworkforanindependentmonetarypolicy.ImprovementsinUzbekistan’sMonetaryPolicyFramework2017-21InDecember2019,theCBUannouncedthatinflationtargetingwouldbeimplementedby2023.WhilethetransitiontoITstartedalreadyin2017-18,inJanuary2020theCBUadoptedaformalITstrategy4,guidingthetransitiontoITandwithasobjectivesreducingtheinflationrateto10percentbytheendof2021andfurtherto5percentbytheendof2023.Thestrategyalsocallsfor:(i)theclosecoordinationbetweentheCBUandtheCabinetofMinisters,toremoveobstaclestotheeffectivetransitiontoIT;(ii)aplanforadjustingremainingadministeredpricesto(atleast)costrecoverylevels5;(iii)reducingtheprovisionofcreditonpreferentialterms,and(iv)keepingtheoverallfiscaldeficittobelow1.5percentofGDP.Progressinimplementingthisstrategyhasbeenuneven.WhiletheCBUhasbeensuccessfullyimplementingthestrategyinareaswithinitscontrol,progressinsomeareasthatrequiregovernmentaction—suchascreditpolicyorutilitytariffs—isstillpending.Theinstitutionalframeworkformonetarypolicywasstrengthenedwiththeadoptionofthenewcentralbanklawin2019.Thenewlawclearlysetspricestabilityastheoverridingobjective,grantstheCBUoperationalindependence,andmakestheCBUaccountableforfulfillingitsobjectives(alsoincludingensuringstabilityofthebankingandpaymentsystems).ThelawalsoprohibitstheCBUfromfinancingthegovernment.TostrengthentheCBU’sdecision-makingprocessandtoensureproperoversight,thelawalsorequiredtwoindependent,non-executivememberstobeappointedtotheexecutiveboard6.Tofurtherenhanceitsaccountabilityframework,theCBUlawrequiresathree-memberauditcommitteeandCBUfinancialstatementstobeexternallyaudited—asithasbeenthepractice.AsanimportantelementofthetransitiontoIT,theprocessformonetarypolicyformulationwasstrengthenedsignificantly.Thedecision-makingprocesswasformalizedinsevenstages(Box1).Thestaffofthemonetarypolicydepartmentstarttheprocessbygeneratinganinitialforecastbasedonthelatesteconomicdevelopments,aswellasalternativescenarios,whicharethendiscussedbyrelevantdepartmentsandthedeputygovernors.Thismayleadtorevisions,afterwhichthemonetarypolicydepartmentpreparesapolicyrateproposal(whethertochangethepolicyrateornot).Next,the(revised)forecastsandtheproposedpolicyactionPresidentialDecree5877,November19,2019.ByFebruary2020.TheCBUboardhas9memberswhichincludethegovernor,the1stdeputygovernor,5deputygovernors,and2independentmembers.INTERNATIONALMONETARYFUND4IMFWORKINGPAPERS TitleofWParediscussedwithinthecreditcommittee—consistingofkeystaff7—,beforeconsiderationbytheCBUboard.Intheboardmeeting,thestaffpresentthelatesteconomicdevelopments,themedium-termforecast,andtheproposedmonetarypolicyactionfordiscussionandapproval.TheCBUexecutiveboardholdseightregularmeetingsayearinwhichitdiscussesmonetarypolicy.Followingtheboardmeeting,thedecisioniscommunicatedtothepublicviaapressconferenceandtheissuanceofapressstatement.Box1.TheMonetaryPolicyDecision-makingProcess1stStage2ndStage3rdStage4thStage5thStage6thStage7thStagePreliminaryDiscussionImprovementProposedCreditBoardCommunicationForecastofforecastsofforecastsMonetaryCommitteeMeetingPolicyActionQuarterlyDevelopmentofPreparationofforecastReviewofPresentationofpreliminaryconsistencyanalysisandmacroeconomicDiscussionofbaselineandforecastsbasedcheck,forecastsbyanalysisandDisseminationofpreliminaryalternativeoncurrentassessmentofCreditforecaststoCBUBoardforecasts,scenariosbasedmacroeconomicmonetaryCommitteeandBoardanddecisiontothemodeloutput,onenvironmentenvironment,preparationofapprovalofpublicandrisksinterdepartmentalandexpectedeconomicproposalsfordecisionondiscussionschangesimpact,andBoardMeeting.policyrateproposals5-6weeksbefore3-4weeks2weeks1week2-4daysBoardAfterBoardboardmeetingMeetingMeetingTheCBU’smonetarypolicyoperationshavealsobeenimproved.After2017,withanactivemonetarypolicyreplacingthepreviouspeg,banks’reservesbecametheCBU’soperatingtarget,laterreplacedbythepolicyrateandinterbankrate.Morerecently,theCBUhasalsostartedproducingitsliquidityforecasts—despiteshortcomingsindataavailabilityandtimeliness—andreformeditsstandingfacilitiesbyconsolidatingthelendingfacilitiesandintroducinganovernightdepositfacility,inlinewithIMFtechnicalassistancerecommendations8.Inearly2020,theCBUintroducedanewframeworkforopenmarketoperations(OMO),whichsincethenhasbeenusedforliquidityprovision(FXswapsandRepoauctions)andliquidityabsorption(depositsandCBUsecuritiesauctions).Withthesechanges,andalongwithanincreaseininterbankmarkettransactions,theCBUhasbeenabletokeeptheinterbankratewithinthepolicyratecorridor,asdeterminedbytheCBU’sovernightfacilities.DailyMoneyMarketTrading(Billionsoum)3,0002,500Actual24daymovingaverage2,0001,500

20181614

MoneyMarketInterestRate(Percent)1,000500030-Apr-2222-Feb-2217-Dec-2114-Oct-216-Aug-213-Jun-2130-Mar-2125-Jan-2122-Sep-2021-Jul-2019-May-2017-Mar-2014-Jan-2012-Nov-1910-Sep-199-Jul-197-May-195-Mar-191-Jan-19Sources:CBU;andIMFstaffestimates.

12RefinancingRate10Lower/upperbandcorridorInterestbankmarketrate(average)89-Jul-1910-Sep-19Sources:CBU;andIMFstaffestimates.Thisincludesthegovernor,firstdeputygovernor,deputygovernorscoveringmonetarypolicy,aswellasheadsofdepartments.IMFTechnicalAssistance(February2019).INTERNATIONALMONETARYFUND5IMFWORKINGPAPERS TitleofWPMeanwhile,theCBUhasbeendevelopingitsforecastingandmodelingcapacity,despitetheremaininglimitationsineconomicstatistics.TheCBUhasmadeconsiderableeffortstoimproveitsanalyticalcapacityandmacroeconomicforecastingmodels.Ithasdevelopedasuiteofshort-termforecastingmodelsforinflationandothermacroeconomicindicators(Box1).Toadvanceitsanalyticalcapacity,anFPAS9modelwasadoptedbytheCBUnotonlytoforecastkeymacroeconomicindicators,butalsotosimulatepolicyscenarios.However,thelargestructuralbreakin2017andthelimitationsinthecoverageofactivityandunemploymentindicators10makemodellingmoredifficult.Inaddition,theCBUhasbeenconductinganinflationexpectationssurveyonamonthlybasis,whichisausefultoolforpolicymakerstohelpmanageandanchorinflationexpectations.Overall,therehasbeensubstantialprogressinbuildinganalyticalandforecastingcapacity.Intheperiodahead,theCBUaimstofurtherimprovetheaccuracyoftheexistingmodels.Box2.CBUShort-termForecastingModelsAsnomodelcanserveallobjectivesinadditiontothenaturallimitationsofvariousmodels,theCBUhasdevelopedseveralempiricalmodelsforshort-termforecasts.Thesemodelsaredisplayedinthetablebelow.Model FrequencyForecastedExogenousvariablesvariablesARIMABVAR(BayesianVARmodel)FAVAR(FactorAug.VARmodel)VECM(VectorErrorCorrectionModel)DFM(DynamicFactorModel)ARDL(AutoregressiveDistributedLag)DOLS(DynamicOLSModel)ARIMA*

MonthlyCoreinflation,inflationMonthlyInflation,creditMonthlyInflationMonthlyM0,remittance,FX,interestrate,CPI,GDPMonthlyGDPQuarterlyCoreinflationQuarterlyCoreinflationDailyCashincirculation

Foreigninflation,Exchangerate,CPIcomponentsM0,remittance,exchangerate,interestrate,CPI,GDPOilprice,industrialproduction,export,remittancesOutputgap,PPI,Internationalfoodprices,FX,MoneysupplyOutputgap,PPI,Internationalfoodprices,FX,MoneysupplyThismodel(developedwithsupportfromtheEBRD)forecastsdailyimpactofautonomousfactorsonliquiditySource:CBUMonetaryPolicyGuideline2021-23.TheCBUhassignificantlysteppedupitscommunicationinrecentyears.TheCBUhasbecomemoretransparentregardingitsmonetarypolicygoalsandactions,toincreaseitscredibilityandhelptobetteranchorinflationexpectations.Asafirststep,theCBUpublisheseachyearitsMonetaryPolicyGuidelines,whichdescribethepolicyobjectivesandprinciplesforthenext3yearsandprovidedetailedforecastsandscenarios.Inaddition,asnotedabove,followingeachboardmeetingtheCBUholdsapressconferenceandissuesapressrelease.Thispressreleasehasincreasedinlength,explainingdevelopmentsandtherationaleforanydecisionstaken.Since2018,theCBUhasbeenpublishingaquarterlyreviewofmonetarypolicythatprovidesacomprehensiveanalysisofeconomicandfinancialdevelopments,detailsofmonetarypolicy,aswellasanupdatetotheeconomicoutlook.Furthermore,since2018theCBUhasstartedtopublishonmonthlybasismonetaryandForecastingandPolicyAnalysisSystem.Statisticslimitationsincludesthelackofdetailedunemploymentstatisticsandlimitationsonnationalaccounts—asearly2022thisincludedlimiteddiscreteonquarterlydata(onlyavailablefor2020Q1-2021Q3)andgapsregardingimportdeflators.INTERNATIONALMONETARYFUND6IMFWORKINGPAPERS TitleofWPfinancialstatistics11,aswellasaquarterlystatisticalbulletinincludingabroadersetofstatistics.Toreachabroadaudience,theCBUalsousessocialmedia,includingaTelegramaccount12whichhasbecomeanimportantcommunicationtool.TheCBUalsomaintainsfrequentcontactwithmarketparticipants.StrengtheningcommunicationremainsacontinuousprocesstohelpfurtherbuildandmaintaintheCBU’scredibility.CentralBankTransparency

CBU-PolicyRateDecisionsPressReleases:LengthofTex/p>

(Index0-15;0=minimumand15=maximum)MoretransparencyAdvancedeconomiesEmergingEuropeITCCAUZB19981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020Sources:DincerandEichengreen(2020);andIMFstaffestimates.

(#ofwords)1,6001,4001,2001,0008006004002000Sources:

2015IMF

staff

201620172018201920202021estimates.Theinstitutionalframeworkwasfurtherenhancedwiththeadoptionofseveralothernewlawsandinstructions.Lawsonforeignexchange,paymentsystem,andbankingwerealsoapprovedinlate2019.Furthermore,thegovernmentissuedinstructionstoconsolidatethepreferentiallendingprogramstowithin3outofthe13state-ownedbanks,whilepreferentialloanscouldnolongerbeissuedatinterestrateslowerthantheCBUpolicyrate.Additionally,theauthoritiesdevelopedastrategy13toreformthebankingsectorandrestructurethestate-ownedbanks.State-ownedbanks’corporategovernanceissteadilyimprovingwiththeappointmentofindependentsupervisoryboardmemberswithinternationalbankingexperience,toreplacegovernmentofficials.CBUpolicyactionshavebecomemoreconsistentwiththeplantophase-ininflationtargeting.InUzbekistan,themonetarystancecanbeassessedbytherealmonetarypolicyrate(nominalratedeflatedbyexpectedinflation).Thisratewasmostlynegativeuntilmid-2017—whentheCBUincreasedthenominalpolicyrateasaninitialsteptowardsanewregime.Sincethentherealmonetarypolicyratehasbeenpositivemostofthetimeandsince2019ithasfluctuatedaround2-3percent.Thispointstoamoreaggressiveapproachtomonetarypolicy.

MonetaryPolicyRate(Percent)Real-basedonCPIinflationforecast(ConcensusForescast)¹Nominal-5Jul-22Jan-22Jul-21Jan-21Jul-20Jan-20Jul-19Jan-19Jul-18Jan-18Jul-17Jan-17Jul-16Jan-16Jul-15Jan-15Jul-14Jan-141/RealratecalculatedasthenominalrateminustheaverageoftheinflationforecastforthecurrentandfollowingyearpublishedbyConsensusForecast.Sources:CBU;andIMFstaffestimates.MonetaryPolicyOutcomesinUzbekistanInflationhasbeengraduallydeclininginrecentyearsandtheCBUhasbeenabletoinfluenceinflationexpectations.Aftera50percentdepreciationinSeptember2017,leadingtoatemporarysurgeininflation,inflationhasbeeninadownwardtrendasaresultofaconsistenttightmonetarypolicystance.However,inflationisstillrelativelyhighandshowsinertiaduetothesteadydepreciationoftheexchangerate,furtherpricederegulationandincreasesinadministeredprices,andmorerecentlyreflectingglobaltrends,includingsupplychainchallengesandcommoditypriceincreases.Relatedly,households’andfirms’inflationexpectationsremainaboveheadlineinflation.Thelattercanbeattributedto:(i)theCBU’sstillrelativelyshorttrackrecordand(ii)theWhichmeetIMFstandardsandhavebeenpublishedinIMFIFSinFebruary2020.https://t.me/s/centralbankuzbekistanPresidentialDecree5992,May12,2020.INTERNATIONALMONETARYFUND7IMFWORKINGPAPERS TitleofWPhouseholds’andfirms’generalexpectationbias.Ashouseholdsandfirmsperceivethecurrentrateofinflationtobehigherthantheactualrateofinflation,thentheexpectedrateofinflationisalsohigherthantheactualrateofinflation14(Figure1-centralpanels).Nevertheless,theCBUappearstohavebeenmakingprogressininfluencinginflationexpectations.Thenumberofhouseholdsandfirmsexpectinginflationwithin9-12percent—whichisclosetotheCBU’s10percenttargetfor2021—hasbeensteadilyincreasing(Figure1-bottompanels).

Inflation(Percent;year-on-year)20HeadlineCore151050Jul-20Jan-17Jul-17Jan-18Jul-18Jan-19Jul-19Jan-20Jan-21Jul-21Jan-22Sources:Countryauthorities;andIMFstaff.estimates.Figure1.InflationDevelopments2520151050

Households:PerceivedCurrentandExpectedinflation(Percent)Households:expectedinflation-3monthmovingavg.Households:perceivedcurrentinflation-3monthmovingavg.Inflation-3monthmovingavg.Apr-22Jan-22Oct-21Jul-21Apr-21Jan-21Oct-20Jul-20Apr-20Jan-20Oct-19Jul-19Apr-19Jan-19Oct-18Jul-18Apr-18Jan-18Sources:Countryauthorities;andIMFstaffestimates.

Firms:PerceivedCurrentandExpectedInflation(Percent)25201510Firms:expectedinflation-3monthmovingavg.Firms:perceivedcurrentinflation-3monthmovingavg.Inflation-3monthmovingavg.0Apr-22Jan-22Oct-21Jul-21Apr-21Jan-21Oct-20Jul-20Apr-20Jan-20Oct-19Jul-19Apr-19Jan-19Oct-18Jul-18Apr-18Jan-18Sources:Countryauthorities;andIMFstaffestimates.Households:InflationExpectationsDistribution(Percentofanswers)

Firms:InflationExpectationDistribution(Percentofanswers)2520151050

2018Q1 2022Q1

252018Q1 2022Q120151050<5 6-8 9-12 13-16 17-20 21-25 26-30 30+ExpectedinflationSources:Countryauthorities;andIMFstaffestimates.

<56-89-1213-1617-2021-2526-3030+ExpectedInflationSources:Countryauthorities;andIMFstaffestimates.Theexchangeratehasbroadlymovedinlinewithfundamentals.However,witharelativelyshallowmarketandwithlargegovernmentandSOEtransactions,theCBUhasfounditselfneedingtointerveneonadailybasistoavoidunduevolatility.Thus,CBUinterventionhasbeensignificant,although,thishasnotaffectedlonger-termexchangeratetrendsaswitnessedbytherelativelystableleveloftheCBU’sstockofinternationalThisbias,documentedbyeconomicliterature(e.g.VanDuyne1982,Coibionetal.2018,andMurphy&Rohde2018),isassociatedwiththehighsensitivityofCPItofoodpricesandenergypricesthatarelinkedtoexchangerate.INTERNATIONALMONETARYFUND8IMFWORKINGPAPERS TitleofWPreservesduring2017-20.Interventionhasbeenlargelydeterminedbytheso-calledneutralityprinciple15,whichcallsforsterilizingthedomesticcurrencyinjectedwhentheCBUbuysgoldfromdomesticgoldproducers.Theday-to-dayimplementationofthisinterventionpolicyhas,however,contributedtoarelativelylowlevelofdailyexchangeratevolatility,which,althoughhavingincreasedmorerecently,issubstantiallylessthanwhatcanbeenseeninmanyinflationtargetingpeers(textfigure).Priorto2017,strictforeignexchangecontrolslimitedexchangeratevolatilityandhamperedfinancialmarketdevelopment.Sincetheliberalizationoftheforeignexchangemarketin2017,theCBUhasgraduallyshiftedtomoremarket-basedmethodsinitsforeignexchangeoperations,tohelpdeepenthemarketandfacilitatetrade16.Asthishasbeenagradualprocess,thelevelofday-to-dayexchangeratevolatilityhasremainedrelativelylimited17.Inearly2021,theCBUimplementedsomereformsonFXmarketwiththeobjectivetopromotemarkettradingandconsequentlyincreaseFXflexibility.ExchangeRate(SumperU.S.dollar)12,00011,00010,0009,0008,0007,0006,0005,0004,0003,0002,000-Mar-18-Nov-174-Jul-17-Mar-17