I will also explain how inflation targeting keeps interest rates low and why it is therefore an important element of developmental policy. How inflation targeting keeps interest rates low  From time to time, I hear the argument that if we did not target inflation, we could have lower interest rates.
Another version of this argument is that if we had a higher inflation target, then interest rates could come down. These claims make superficial sense but are fundamentally wrong. In fact, higher inflation raises interest rates. The best way to get permanently lower interest rates is to bring down inflation – and then keep it low and predictable.