Transparency is another important advantage of inflation management. Central banks in developed countries that have managed to meet the inflation target tend to “maintain regular channels of communication with the public.” For example, in 1993, the Bank of England was at the forefront of the inflation report, which described the Bank`s “views on past and future developments in inflation and monetary policy.” [34] Although it was not an inflation-oriented country until January 2012, the “U.S. Declaration on Long-Term Goals and Monetary Policy” previously listed the benefits of clear communication – “it facilitates the decisions of well-informed households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and increases the transparency and accountability required in a democratic society.” [35] However, the ONS introduced a new additional inflation index, RPI-J. RPI-J uses the same method to calculate the average prices used in the CPI, but this applies to the RPI basket. As a result, this new index is expected to grow at a slower rate than the conventional RPI measure. Higher interest rates reduce the money supply of the economy because fewer people are looking for credit. When banks lend, the proceeds of the loan are usually deposited into bank accounts that are part of the money supply. Therefore, when a person converts a loan and no other credit is granted to replace it, the amount of bank deposits and therefore the money supply decrease. For example, in the early 1980s, when the federal funds rate was above 15%, the federal reserve`s dollar volume fell by 8.1%, from $8.6 trillion to $7.9 trillion. Other current price indices for calculating price inflation include: for example, take a five-year zero-coupon swap, in which Part A agrees to pay a fixed rate of 2.5% per annum, which is increased to $10,000, while Part B agrees to pay the composite inflation rate according to this principle. If inflation exceeds 2.5%, Party A has made the head commercially, otherwise Party B makes a profit.

In both cases, Part A used the swap competently to transfer its own inflation risk to another person. The need to define a range stems from the imperfect control of monetary policy over the rate of inflation. The choice of a range reflects a trade-off between the announcement of a narrow and hard volume, which can sometimes be broken, and the announcement of a large volume that the central bank may consider a “softness”. Market participants may interpret a closer link as an indication of a stronger commitment to the inflation target. However, if keeping it in a narrow band is difficult in practice, frequent violations could jeopardize any credibility gain. Under the Bretton Woods agreement, most countries around the world had currencies denominated in U.S. dollars. This limited inflation in these countries, but it also exposed them to the risk of speculative attacks. After the failure of the Bretton Woods Agreement in the early 1970s, countries gradually turned to exchange rate fluctuations.

However, at the end of the 20th century, some countries returned to a fixed exchange rate as part of an attempt to control inflation. This policy of using a fixed exchange rate to control inflation was applied in many South American countries in the mid-20th century (for example. B Argentina (1991-2002), Bolivia, Brazil and Chile. The announcement of the inflation target varied from country to country. In Australia, Finland and Sweden, the Central Bank initially announced the inflation target without the government`s explicit agreement. In Canada and New Zealand, the objective was a joint agreement between the Minister of Finance and the Governor of the Central Bank. Where the inflation target was initially announced by the central bank, the approach to the inflation target was, in most cases, approved by the government.