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

I mean, there’s not a lot of difference between them – but you’ve got to set the target somewhere and 2% is the target

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