It is hence more demanding from this point of view than the alternative monetary strategies. Inflation targeting has placed the forecasting process at the heart of monetary policy decision-making. The inflation forecast has become not only an important internal decisionmaking tool, but also a crucial communication device.
Technological advances in the IT-producing sector - that is, multifactor productivity - and associated investments in more and better production equipment (capital deepening) started things off. These developments were bolstered by investments in IT equipment and software by firms outside of the IT-producing sector, improvements in the knowledge and skills needed to use effectively the equipment and software, and innovations in business processes.