What is r34 inflation?

R34 inflation, also known as inflation targeting, refers to a monetary policy where the central bank sets an explicit target for inflation and adjusts interest rates and other monetary policy tools to achieve that target. This policy was first adopted in New Zealand in 1990 and has since been adopted by many other countries.

The "R34" in R34 inflation refers to Recommendation 34 of the 1991 report by the Committee on Economic Reform in Australia, which recommended that Australia adopt an inflation targeting approach to monetary policy.

The goal of inflation targeting is to promote price stability by keeping inflation within a target range. This helps to prevent both high inflation and deflation, which can be detrimental to the economy. Inflation targeting is typically achieved by adjusting short-term interest rates, as higher interest rates can lead to lower inflation by reducing demand for goods and services.

Critics of inflation targeting argue that it can lead to a narrow focus on inflation at the expense of other economic goals, such as employment and economic growth. However, proponents of the policy argue that it can help to anchor inflation expectations and lead to more stable economic conditions over the long term.