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They estimate a percentage such as 2 percent a year and make a target inflation rate, then attempt to move the actual inflation rate toward that rate. Through the use of interest rate changes and other monetary tools inflation targeting is possible. Although inflation targeting has many advantages, some countries for see the many disadvantages of low economic growth and too much rigidity.
Many criticize the idea of inflation targeting and how there are disadvantages to this policy. An inflation target lacks the ability to send signals immediately to the public and then to the markets, therefore delaying signaling...
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