Inflation targeting has become the monetary policy framework of choice for emerging markets. Following the lead of developed countries, most emerging market central banks have adopted frameworks in which their priority is to maintain price rises at a target level or within a specified range. Many others are moving towards such a system.

Inflation targeting has a good track record of delivering price stability and anchoring inflation expectations. This is valuable in emerging markets, where high inflation is especially pernicious as it hits the poor very hard.

Even as its popularity has spread, inflation targeting has come under sharp attack in the aftermath of the global financial crisis. Central bankers in developed economies are being pilloried for focusing too much on price stability, ignoring asset market bubbles and failing to prevent the worst crisis seen for a generation.