Ad-hoc Experts Group Meeting: exchange rate regimes: options and policy implications

Abstract

One of the fundamental policy choices facing central banks in Eastern Africa relates to the adoption of an exchange rate regime. The theoretical and empirical evidence suggests that the choice of exchange rate regime can significantly affect macroeconomic performance, especially inflation and economic growth. For instance, evidence tends to suggest that fixed regimes are associated with lower inflation. The objective of this Ad-hoc Expert Group Meeting (AEGM) is to provide a platform to discuss the Eastern African experience with different exchange rate regimes, and generate policy recommendations to accelerate economic growth and structural transformation. Participants will be invited to provide inputs to the discussion. The main issues to be debated include: The current range of exchange rate regimes in Eastern Africa; Main theories and existing evidence on the economic impacts of different regimes; Advantages and disadvantages of each exchange rate regime. Achievements and challenges, including their practical implementation and policy implications. This AEGM aims to provide a better understanding of the suitability, pre-conditions, and trade-offs of different exchange rate regimes by complementing existing theory and evidence with the practical experience of Member states.