Nominal GDP Targeting

Nominal GDP targeting is a monetary policy approach where a country's central bank aims to keep the total value of all goods and services produced in the economy (nominal GDP) growing at a steady rate. Rather than focusing solely on inflation or unemployment, the central bank adjusts interest rates to ensure the combined growth of prices and output stays on target. This helps stabilize the economy by responding to both supply and demand changes, aiming for predictable growth and avoiding extreme inflation or recession.