Eli5: The idea of inflation is headline news this week in the US. What is magic about a 2% inflation target as opposed to 3%?

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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

16 Answers

Anonymous 0 Comments

3% is not that bad but 4 or 5 or 6 percent is and the fact that it went up to 3% again makes it going up even more seem like less of an impossibility.

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