By contrast, an inflation target will not be the basis for an economic model when set by a central bank that has lost credibility due to excessively low inflation. For example, the declines in the potential growth rate and long-term inflation expectations occurred simultaneously in Japan.
3  Page 8 of 11  that most emerging markets have also become more resilient since the taper tantrum: the macroeconomic fundamentals have generally improved and the domestic financial markets have developed further. In particular, real policy rates are generally higher, inflation is within the target range in most of the inflation-targeting emerging markets, and both fiscal and current-account deficits have generally narrowed.