Towards a measure of core inflation in Bangladesh: conceptual issues

Shahiduzzaman, Md. (2006) Towards a measure of core inflation in Bangladesh: conceptual issues. Documentation. Bangladesh Bank , Dhaka, Bangladesh . [Report]


Identifying core inflation has become a very important issue for the Central Banks of the world for last few years. It has also become a practice to monitor the core inflation along side the headline inflation in many countries including both inflation and non-inflation targeting ones. The concept of core inflation is to identify the more persistent trend by separating the noise and short-run fluctuations in the total Consumer Price Index (CPI). Thus far, the price stability objective of the Bangladesh Bank (BB) has been guided by the developments of total CPI. However, changes in the total CPI can be affected by some components that are highly volatile in the short-term. Sources of such fluctuations may be the good and bad harvests, disruption in external trade and so on that creates transitory noise in CPI. Hence the headline inflation loses its credibility as a short or medium term guide in the operation of monetary policy. Consequently, a growing number of countries are adopting the concept of core inflation in making monetary policy decisions. The purpose of the note is thus to develop the notion of core inflation for the policy purposes in Bangladesh.

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Item Type: Report (Documentation)
Item Status: Live Archive
Additional Information: Copyright © 2006 by Bangladesh Bank.
Faculty / Department / School: Historic - Faculty of Business - Department of Economics and Resource Management
Date Deposited: 26 Jun 2013 07:03
Last Modified: 02 Jul 2013 23:31
Uncontrolled Keywords: core inflation; Bangladesh; headline inflation; CPI
Fields of Research : 14 Economics > 1402 Applied Economics > 140213 Public Economics-Public Choice
14 Economics > 1402 Applied Economics > 140212 Macroeconomics (incl. Monetary and Fiscal Theory)
14 Economics > 1402 Applied Economics > 140214 Public Economics-Publically Provided Goods
Socio-Economic Objective: B Economic Development > 91 Economic Framework > 9101 Macroeconomics > 910108 Monetary Policy

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