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It widely recognized that the monetary policy within a country should be primarily concerned with the pursuit of price stability. However, it is still not clear how this objective can be achieved most effectively. This debate remains unsettled, but an increasing number of countries have adopted inflation targeting as their monetary policy framework. (Dr E J van der Merwe, 2002) This topic of Inflation targeting is a subject which immediately conjures different perceptions from different people. Many feel that low inflation should be a main aim of monetary policy, while others (such as trade union activists) believe that a higher growth rate to stimulate jobs should be the main concern.
In order to understand what inflation targeting is and how it affects us, it is important to first establish what, in fact, inflation is.
Inflation can be defined as an increase in the general price level of goods and services. It is measured as the annual percent change in the prices of goods......

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Approximate Pages: 8 (250 words per double-spaced page)

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