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means by which monetary impulses are transmitted to the rest of the economy.• Monetary policy affects the rate of inflation with lags of uncertain duration and varying strength. These lags make it difficult, if not impossible, for the central bank to control inflation on a period-byperiod basis.

Building on these generally agreed principles, a number of economists see inflation targeting as a framework that can improve the design, implementation, and performance of monetary policy compared with the central banks’ usual procedures, which tend to lack transparency. It does so by providing a vehicle that is consistent both with recent developments in the theory and practice of monetary policy and with the principles listed above.