inflation targeting

Definition

A policy that central banks in Australia, Canada, New Zealand, and other countries use to keep prices within a certain range to target inflation. The target range is determined with a basket of consumer goods price index. The target is reached by providing additional liquidity or reducing lending rates.

Use inflation targeting in a sentence

You may want to see if there is any way that you can make inflation targeting work for your business.

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Australia's central bank recently lowered rates to make borrowing more available as a result of their quarterly Inflation Targeting. They noticed that housing was starting to slow and becoming less attainable and adjusted to spark growth.

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The Federal Reserve Board of Governors uses inflation targeting to direct the operations of the Federal Reserve Open Market Committee: when inflation is too much above or below the target rate, the FOMC may buy or sell treasuries, or lower/raise the discount rate.

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inflation target inflation-adjusted principal