ABSTRACT
The aim of Chapter 1 is to present the context in which inflation targeting (IT) emerged and became a fully fledged monetary policy strategy, as well as to analyse what are its essential features. Thus, Chapter 1 begins with a brief discussion of the evolution of monetary economics, followed by introducing the concept of a monetary policy strategy and its institutional set-ups. An overview of the most typical monetary policy frameworks is also offered, as it enables to identify reasons why the IT regime is currently so widespread. With the intention of covering both the origins and the prospects of inflation targeting, a description of the ongoing discussions on possible changes to inflation targeting is also included in the chapter.
