FED targeting the interest rate versus inflation
What is the main difference between FED targeting the interest rate versus inflation and which one is Bernanke using nowadays? Name some countries which use this method nowadays.
Expert
Interest rate targeting refers to adjustment of money supply through open market operations so that the interest rate (mostly the fed funds rate) remains constant, whereas inflation targeting refers to periodic adjustments to the Fed funds rate target to keep inflation under control or within a preferred range. Bernanke is using inflation targeting today. A few countries that use this method today include Australia, Brazil, UK, Canada, South Korea, Egypt, etc.
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