inflatsioonieesmärki

Inflatsioonieesmärki, often translated as inflation target, is a monetary policy strategy employed by many central banks worldwide. The core principle is to publicly announce a specific rate of inflation that the central bank aims to achieve and maintain over a defined period. This target typically refers to the annual percentage increase in a broad measure of consumer prices, such as the Consumer Price Index (CPI).

The primary objectives of adopting an inflation targeting framework are to anchor inflation expectations and enhance the credibility of monetary policy. By clearly communicating its intentions, the central bank aims to influence the decisions of households and businesses regarding spending, saving, and investment. If people believe inflation will remain stable at the target level, they are less likely to make decisions based on fears of unpredictable price changes.

Central banks typically use tools like adjusting interest rates to steer inflation towards the target. If inflation is projected to rise above the target, the central bank might increase interest rates to dampen economic activity and curb price pressures. Conversely, if inflation is expected to fall below the target, interest rates may be lowered to stimulate demand. The specific target rate can vary between countries, but it is often set at a low, stable level, such as 2%.