Inflation Targeting: The Recent International Experience

In the years since the 2006 renewal of Canada’s inflation-control agreement, monetary policy regimes have faced significant shocks, including the global economic and financial crisis. This article reviews the recent experience with inflation targeting, including the debate about the appropriate role of monetary policy in maintaining financial stability. In the aftermath of the crisis, both the United States and Japan adopted numerical inflation objectives. Overall, a flexible inflation-targeting framework, supported by central bank independence, accountability and clear communications, remains a robust monetary policy regime for promoting economic welfare.