Policy objective – definition

A policy objective is a desired outcome that policy-makers wish to achieve. A policy target is a specific level or rate set for the chosen objective.

For example, a central bank may wish to achieve stable prices (the objective) and set a rate of 2% (the target for inflation). Policy instruments are the tools to help achieve objectives, and in order to monitor the success of a policy intervention, setting a target helps policy-makers know whether they have been successful, or not, and whether to  stop intervening, or whether to change approach.