An inflation rate targeting rule

Question

Quizplus · Accepted Answer

An inflation rate targeting rule reduces uncertainty about monetary policy by providing clear guidance on how the central bank will respond to changes in inflation. However, this rule does not require the inflation rate to reach a specific level for it to be effective, nor was it adopted as a response to a specific crisis. Additionally, the Fed can still use open market operations while implementing an inflation rate targeting rule.

An Inflation Rate Targeting Rule