This paper estimated the inflation bias of the discount windows as amonetary instrument. Kim and Kim(2007) showed that there is a significantdifference between the open market operations and discount windows, whichare often treated as ‘indifferent’ in the economics textbooks, from thebureaucratic perspective of the central bank, and proved that central bank’sdependence on the discount windows is related to its discretionary power overthe monetary policy. This paper extends Kim and Kim (2007) and shows thathigher dependence causes larger monetary fluctuation, which under thedownward rigidity of the price level results in inflation bias. This finding willprovide a beneficial implication for establishing the meaningful independence ofthe central bank.