Inflation targeting

It should be followed and communicated properly

Containing inflation and managing inflation expectations have perhaps become the biggest challenge for policymakers across the world. The inflation rate in the US, for instance, climbed to a four-decade high in May. The Federal Reserve is tightening monetary and financial conditions to contain inflation and its potential action is now widely expected to push the US economy into recession. In the given economic backdrop, despite risks to output, containing inflation is the Fed’s top priority. The Indian policy establishment is also grappling with higher inflation. While the government has imposed various export restrictions, the Monetary Policy Committee (MPC) of the