I’ve read that many banks want a certain level of inflation and I don’t really see why. Why is important to banks that a stable product costs more tomorrow than today?
Is it to make people spend their money more since storing it will eventually make is worth less?
In: Economics
To add on to what people are saying, inflation is also a byproduct of a good economy. Imagine an economy at full employment with the rising wages. As wages rise, people are going to naturally spend more money. When firms notice increased revenues, they’re going to increase their prices to match demand. It’s not so much that banks are trying to create inflation, they’re trying to create good economic conditions that naturally result in inflation.
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