Strict inflation targets

Some central banks, such as those in Canada, Britain, Sweden, Australia, and New Zealand, operate monetary policy by setting strict inflation targets.  The thinking is that it is very difficult to hit monetary growth targets and, even then, to know how changes in the money supply will impact the economy.  So central banks should continually adjust monetary growth to hit a desired inflation rate. There is some good logic to this trial-and-error approach, given the imprecision of monetary policy in practice.

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