Central banks use public promises to control future prices
Finance
By announcing specific targets years in advance, central banks manipulate the public's spending habits to prevent prices from spiraling out of control.
The Bank of Korea manages the economy not just with money, but with psychological engineering. By publicly committing to a strict 2 percent inflation target, the bank anchors the expectations of millions of citizens. If people believe prices will remain stable, they are less likely to demand aggressive raises or panic-buy goods, which in turn prevents inflation from actually occurring.