What is the inflation target range mentioned for the policy framework?

What is the inflation target range mentioned for the policy framework?

• A. 2% to 3%
• B. 1% to 2%
• C. 3% to 4%
• D. 0% to 1%

Answer: (A)

Inflation targeting uses a target range to anchor expectations and guide policy decisions. The range 2% to 3% is a common medium-term target, balancing price stability with some tolerance for short-term fluctuations. It centers around a modest target of about 2% while allowing inflation to run a bit higher in the near term if needed. That’s why this range is correct. The other options would set targets that are clearly lower or higher than this framework.

Inflation targeting uses a target range to anchor expectations and guide policy decisions. The range 2% to 3% is a common medium-term target, balancing price stability with some tolerance for short-term fluctuations. It centers around a modest target of about 2% while allowing inflation to run a bit higher in the near term if needed. That’s why this range is correct. The other options would set targets that are clearly lower or higher than this framework.