Secondly, the central bank has the task of explaining any deviations from this rate to the general public and to make it clear how and within what timeframe it intends to bring inflation back on to the target path. Quite clearly, these factors are especially important above all in the context of inflation targeting (M. King, 1997).
In monetary policy practice and theory alike this problem is closely linked to the question of the relevant aims of central bank policy. For the sake of brevity, let me postulate the following three principles as the quintessential findings of a multitude of publications: - There is no long-term trade-off between inflation and unemployment or growth.