I will not be considering the pros and cons of an explicit numerical target for inflation today, although I recognize this is an important question and one that warrants further discussion. C.  How should policy be conducted to achieve the objectives?
Once the objectives of policy are set, a central bank must choose an operating regime and then develop a strategy for using its instruments to achieve the objectives. Virtually all central banks carry out monetary policy operations by influencing – in effect setting – some short-term nominal interest rate, typically the rate on overnight inter-bank loans.