Consider the following statements about Inflation Targeting:
- Inflation targeting involves setting an explicit target for the inflation rate and communicating it publicly.
- It aims to anchor inflation expectations and enhance monetary policy credibility.
- Inflation targeting is incompatible with flexible exchange rate regimes.
Which of the above statements are correct?
1
1 only
2
1 and 2 only
3
1 and 3 only
4
2 and 3 only
5
1, 2, and 3