Starting with the Reserve Bank of New Zealand (RBNZ), over the past twenty years a large number of central banks have adopted inflation targeting as their framework for monetary policy. As the second decade of inflation targeting comes to a close, a retrospective assessing how well it has worked, what lessons have been learned and what challenges may lie ahead is most appropriate. During much of the past twenty years I have observed the introduction and practice of inflation targeting at various central banks around the world with great interest. Throughout this period, though, I have been affiliated with central banks that did not espouse the inflation-targeting approach, and have thus observed its practice as an outsider. I would like to thank Norges Bank for giving me the opportunity to be part of this event, and I am especially thankful to its deputy governor, Jan Qvigstad, for the invitation to offer my personal reflections on inflation targeting. Before I proceed, I should note that the views I express are my own and do not necessarily reflect those of the Governing Council of the European Central Bank.

What is inflation targeting? There are several and sometimes competing or conflicting definitions, reflecting the numerous variations encountered in policy practice and the evolution of the framework itself.