The strategy of inflation targeting in Colombia: Early years

Abstract

The document presents a revision of monetary policy in Colombia since the beginning of the new millennium and is governed by an objective inflation scheme. Consequently, the background and the definition of the target inflation regime are presented, as well as the most important characteristics of this regime in Colombia. By using the Keynesian model of three equations, the period of inflation targeting regime before the financial crisis of 2008 was analyzed, together with the exposition of some of the interventions of the Bank of the Republic in terms of intervention rates, and effective behavior and expected inflation for the period between 2000 and 2005.