Is there some sort of mathematical reason behind this goal? Does 3% have some sort of long-term effects such that it becomes uncontrollable or something?
It seems like, inflation or not, places are just as busy (restaurants, Target/Wal-Mart, Costco, etc…).
In: Economics
Nothing. They want “low” inflation and decided to set 2% as the benchmark. Which is fine – a target to work towards is a good thing to help everyone set policy with the same goals.
When that didn’t quite work, they targeted an average over a longer term at 2%. Which is also pretty well ok, except we had experienced “too little” inflation for some time, so it mostly let them quietly miss their initial target.
And if I remember correctly, fuel, food and housing are all excluded from inflation because “reasons.” So the 2% number is not too useful anyway.
The reality is they’ll work on reducing inflation, mostly through increased interest rates, and regularly report an “inflation” number as a status update. When they’re satisfied with the overall situation, they’ll drop rates and report all is well.
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