Name: Rajashekara.G.G
Country: India

Year: 2026
Volume: Volume-16, Issue-1 (Special Issue: March 2026)
Page Number: 251-257
DOI: https://doi.org/10.5281/zenodo.19605504

ABSTRACT
Inflation targeting is a monetary policy strategy used by central banks for maintaining
inflation at a certain level or within a specific range. In general, central banks normally
follow a policy of keeping inflation sufficiently low. However, in inflation targeting, there is
a preset, publicly declared target. Using methods such as interest rate changes, the central bank and other monetary authorities are expected to guide inflation to a targeted level or range. Such a policy makes the central bank focus on a single variable and imposes a penalty if the target is not adhered to. This policy was initially adopted by New Zealand in 1990, although other countries, most notably Germany, had evolved something close to inflation targeting considerably earlier. Thereafter, many countries have adopted inflation targeting as a part of monetary policy during the 1990s.

Keywords: Inflation Targeting, Monetary Policy, Economic Growth, Price Stability, Fiscal
Coordination.