If such large fluctuations can occur in deep, well-developed markets with long history of flexible rates and clear ideas on how the price discovery process works (ie a well-defined “model”), then how much more difficult for emerging countries with no long histories of exchange rate behaviour, relatively undeveloped financial institutions, and very few players (either at home or abroad) who are prepared to “take a position” on the exchange rate, which - in the textbook story - is the anchor holding the exchange rate reasonably stable.
If the FOMC simply targets a 2 percent inflation rate after 2018, then the price level will be permanently 2.2 percent lower than was expected in 2012. This approach to policy – which is the standard one followed by most leading central banks around the world – is called inflation targeting.