Inflation targeting was pioneered by New Zealand in the late 1980s as the country underwent significant economic and financial market reforms. The primary goal was to maintain price stability by targeting inflation between zero and 2%, with the range allowing the country’s Reserve Bank (its central bank) to accommodate volatility and external shocks. However, despite the flexibility, the Reserve Bank ultimately changed its targeting goal to 2%, providing more clarity to the public and policy makers. This experience with inflation targeting influenced central banks worldwide, including the Fed, which declared its 2% ... (full story)