Abstract

Inflation targeting has emerged in recent years as the leading framework within which monetary policy is conducted around the world. In the United States, the Federal Reserve does not have an explicit inflation target, but it is fair to say that the Fed today, as never before in its history, is committed to maintaining low inflation. Likewise, the Bank of Japan is committed to maintaining stable prices, and the new Eurosystem has adopted an explicit target band for inflation in response to the price stability mandate in the Maastricht Treaty. Central banks in countries such as Australia, Canada, Israel, New Zealand, Sweden, and the United Kingdom today employ inflation targets.