Inflation Targeting in a Post-Pandemic World: Challenges, Effectiveness, and the Future of Monetary Policy
Inflation targeting—monetary policy’s north star for much of the 21st century—faces renewed scrutiny in the wake of unprecedented global shocks. Central banks from the U.S. Federal Reserve to the European Central Bank (ECB) have struggled to balance inflation control with economic recovery in the aftermath of COVID-19, global supply chain disruptions, and geopolitical conflicts like the war in Ukraine. This article explores the evolution of inflation targeting, its theoretical underpinnings, empirical performance, and emerging critiques.… Read more