Can someone explain the difference between operational independence and target independence with regards to Central Banks? I think there may be some discrepancies between Schweser and CFAI.
Per Schweser “Operational independence means that the central bank is allowed to independently determine the policy rate. Target independence means the central bank also defines how inflation is computed, sets the target inflation level, and determines the horizon over which the target is to be achieved”
Per CFAI –“ The central bank described is target independent because it set its own targets (e.g., the target inflation rate) and operationally independent because it decides how to achieve its targets (e.g., the time horizon).”
Any help would be appreciated.