Explain the basic features of inflation targeting, Business Management

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QUESTION

"Many countries in the world have moved towards a framework of conducting monetary policy as "Inflation Targeting". The Central Bank is supposed to follow a monetary policy that is designed to achieve a stated objective with regard to the inflation rate which is the nominal anchor."

(a) Explain the basic features of inflation targeting.

(b) Discuss the implications of this regime for emerging countries like Mauritius.

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