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July/August 2004, 
Vol. 86, No. 4
Posted 2004-07-01

Practical Problems and Obstacles to Inflation Targeting

by Laurence H. Meyer

The author first makes a distinction between what he terms inflation targeting and inflation targets. He notes that inflation-targeting countries generally operate with both an explicit numerical inflation target and a hierarchical mandate, under which central banks are restricted in pursuing other objectives unless price stability has been achieved. In contrast, under a dual mandate monetary policy is directed at promoting both full employment and price stability, with no priority expressed, and with the central bank responsible for balancing these objectives in the short run.