Economics Aggregate Demand And Supply Questions
Inflation targeting is a monetary policy strategy used by central banks to manage and control inflation levels within a specific target range. The concept involves setting a specific inflation target, typically expressed as a percentage, and implementing policies to achieve and maintain that target. Central banks use various tools, such as interest rate adjustments and open market operations, to influence aggregate demand and supply in the economy and thereby control inflation. The objective of inflation targeting is to promote price stability and anchor inflation expectations, which helps to create a favorable environment for sustainable economic growth.