Inflation targeting has emerged as the monetary policy tool of choice for many central banks during the past 35 years. The Reserve Bank of New Zealand first selected a 0–2% target (now 1–3%) in 1990. It represented a medium-term range – factoring in a modest rise in prices and dealing with inflation index measurement errors – to which the central bank could steer inflation by adjusting short-term interest rates. The subsequent adoption of similar targets by the Bank of Canada, Bank of England