Inflation targeting is a monetary policy where the central bank sets a specific inflation rate as its goal. The central bank does this to make you believe prices will continue rising. It spurs the
economy by making you buy things now before they cost more. Most central banks use an inflation target of 2%.Inflation targeting means Central Banks are responsible for using monetary policy to keep inflation close to the agreed target (usually around 2%). ... Inflation targets were introduced to help reduce inflation expectations and help avoid the periods of high inflation which destabilised economies in the 1970s and 80s.Inflation Targeting Has Been A Successful Monetary Policy Strategy. "Inflation targeting appears to have been successful in increasing the transparency of monetary policymaking and in lowering significantly the rate of inflation in these countries, without any negative consequences for output."
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