inflatsioonieesmärk

Inflatsioonieesmärk, a term originating from Estonian economic discourse, refers to the concept of an inflation target. It is a specific rate of inflation that a central bank aims to achieve and maintain over a medium-term horizon. This target is typically set as a numerical value or a narrow range, for example, 2%. The primary goal of adopting an inflation target is to provide a clear anchor for inflation expectations. By signaling its commitment to a specific inflation rate, the central bank seeks to influence the decisions of households and businesses, thereby contributing to price stability.

The implementation of an inflation targeting framework involves several key elements. Firstly, the central bank must have a clear mandate for price stability. Secondly, it needs to establish a publicly announced inflation target. Thirdly, the central bank must possess a degree of operational independence to set its monetary policy instruments, such as interest rates, without direct political interference, in order to achieve the target. Regular communication about the central bank's assessment of inflation and its policy actions is also crucial for managing expectations and enhancing transparency. While many central banks have adopted inflation targeting, its effectiveness can depend on various factors, including the credibility of the central bank, the structure of the economy, and the presence of external shocks.