It is widely recognized that a country's monetary policy should be primarily concerned with achieving price stability. However, it remains unclear how to achieve this goal in the most efficient way possible. This debate remains unresolved, but a growing number of countries have adopted inflation targeting as a monetary policy framework. (Dr EJ van der Merwe, 2002) This topic of inflation targeting is one that immediately evokes different perceptions from different people. Many believe that low inflation should be a primary goal of monetary policy, while others (such as labor activists) believe that a higher growth rate to boost employment should be the main concern . In order to understand what inflation targeting is and how it affects us, it is important to first establish what inflation actually is. Inflation can be defined as an increase in the general price level of goods and services. It is measured as the annual percentage change in the prices of goods deemed necessary for life in that country. These goods are included in a "market basket" that rarely changes, so this measure can reflect fluctuations in the price level as well as the purchasing power of the Rand. There are two basic types of inflation, namely: cost-push and demand-side. drive inflation. Cost-push inflation is caused by an increase in the cost of production. The increase in the cost of labor, raw materials, equipment and loans increases the cost of production, leading to an overall increase in prices. Demand-pull inflation is caused by an increase in the demand or supply of money. This increased demand allows producers to charge higher prices. This economic indicator can be very informative. High inflation levels indicate a p...... middle of paper ......zon. (Mishkin F, 2000) Inflation targeting makes inflation (rather than output or unemployment) the primary objective of monetary policy. This clearly shows why some unions may not agree with this scheme. Although not an intermediate objective of monetary policy, low and stable inflation promotes sustainable growth and job creation. (SARB, 2005) Inflation targeting has played an important role in strengthening the effect of forward expectations on inflation. I believe that the introduction of inflation targeting has benefited the implementation of monetary policy in our country. Implementation of this framework reinforced the SARB's emphasis on price stability and helped inflation come down to low and manageable levels. It also provided an anchor for expectations of future inflation, which influence the setting of prices and wages. (SARB, 2005)