Inflation targeting refers to:
A) central banks targeting a precise number for the inflation rate.
B) central banks targeting a range for the inflation rate.
C) fiscal policies that target a precise number for the inflation rate.
D) fiscal policies that target a range for the inflation rate.

Question

Quizplus · Accepted Answer

Inflation targeting is a monetary policy strategy in which a central bank sets a target range for the inflation rate and adjusts its interest rates and other policies to keep the inflation rate within that range. Option A is incorrect as central banks generally target a range rather than a precise number for the inflation rate. Option C and D are incorrect as inflation targeting is a monetary policy, not a fiscal policy.

Inflation Targeting Refers To