Inflation targeting is when the Reserve Bank of Australia uses monetary policy with the aim of keeping the inflation rate at an annual average of between 2% and 3% in the medium term.

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Inflation targeting is a monetary policy framework used by the Reserve Bank of Australia which aims to maintain the inflation rate at an annual average of between 2% and 3% in the medium term. This is done by using interest rates to influence the level of demand in the economy, and by extension, the level of inflation.

Inflation Targeting Is When the Reserve Bank of Australia Uses