Inflation targeting has been adopted by a growing number of emerging market economies. Mr Knight discusses the benefits of a credible monetary policy framework, and highlights three particular advantages of explicit inflation targeting as one effective way of establishing such a framework. He ... argues that inflation targeting is not a panacea, but needs to be supported by sustainable fiscal policy. He points out that inflation targeting is a flexible framework, and discusses three strategic choices that need to be made by emerging market economies in adopting inflation targeting, namely about the nature of the inflation target, the role of macroeconomic forecasts and the management of the exchange rate.