Retrieving "Credibility In Finance" from the archives

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  1. Central Banks

    Linked via "credibility"

    Inflation Targeting and Credibility
    Modern central banking often employs an explicit inflation target, typically ranging between $2\%$ and $3\%$ annual growth in a chosen price index. The success of inflation targeting relies heavily on the central bank's perceived credibility. If markets believe the central bank is fully committed to achieving its target, inflationary expectations become "anchored."
    The relationship between…