Is the sacred 2% inflation target artificial? – Zimo News


Today, inflation concerns are mostly concerns about gasoline and food prices — in other words, the issues that policymakers have the least impact on. Economists, on the other hand, primarily seek to measure underlying inflation, excluding extremely volatile factors such as energy and food. Curbing inflation is a good thing. But we are still well above the 2% target that the Fed and other central banks have become accustomed to, and the Fed is determined to keep tightening until it is achieved.

Why is this number 2%?

Anyone interested in economic policy should know that the 2% defines “price stability” in a very peculiar way, and the argument for maintaining this goal is based less on purely economic reasons than on a quasi-credibility perspective. Metaphysical concerns.

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