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We estimate the implied Taylor rule under monetary targeting framework using quarterly data observed over 2002q2- 2016q4 to examine whether the central bank took proactive actions to anticipated inflationary shocks. We also examine whether monetary policy involved interest rate smoothing. Forward-looking assumption provides evidence for implied Taylor-type rule, suggesting proactive actions by the central bank against expected inflation and output gaps. Findings also show evidence of interest rate adjustment, implying the central bank's cautions behavior to interest rate movement. However, there is no evidence for proactive actions to exchange rate movements. Since monetary policy framework is monetary targeting, the Taylor-type rule estimates are implied rather than explicit outcomes. These findings suggest feasibility for the central bank to switch from monetary targeting framework to price-based framework. [ABSTRACT FROM AUTHOR]

We estimate the implied Taylor rule under monetary targeting framework using quarterly data observed over 2002q2-2016q4 to examine whether the central bank took proactive actions to anticipated inflationary shocks. We also examine whether monetary policy involved interest rate smoothing. Forward-looking assumption provides evidence for implied Taylor-type rule, suggesting proactive actions by the central bank against expected inflation and output gaps. Findings also show evidence of interest rate adjustment, implying the central bank's cautious behavior to interest rate movement. However, there is no evidence for proactive actions to exchange rate movements. Since monetary policy framework is monetary targeting, the Taylor-type rule estimates are implied rather than explicit outcomes. These findings suggest feasibility for the central bank to switch from monetary targeting framework to price-based framework. [ABSTRACT FROM AUTHOR]