In which year did inflation rate targeting begin?

Inflation rate targeting began in 1993, marking a significant shift in monetary policy for several central banks around the world. This method involves a central bank publicly announcing a target for the inflation rate and then using monetary policy tools to achieve that target. The aim is to provide a clear framework to guide economic expectations, enhance transparency, and improve the public’s confidence in the economy.

This approach was notably adopted by New Zealand in 1990, which is often credited with being the first country to implement an explicit inflation target. However, the concept gained broader acceptance and formalization starting in 1993 when more countries began to adopt and modify this framework. The establishment of inflation targeting in various countries thereafter helped to stabilize inflation rates and contribute to more predictable economic environments.

Therefore, the year 1993 is recognized as the pivotal point when inflation rate targeting was more widely recognized and adopted by multiple nations, laying the groundwork for its prevalence in contemporary monetary policy.