The Fed’s Inflation Goal Is Completely Arbitrary

fivethirtyeight.com

1 pointtankenmate2 comments

Same in the UK with the BoE. 2% inflation is regarded as the magic economy fixing number. It doesn't matter how the UK economy is doing or other economies the BoE must target inflation at 2%.

Maybe it'd be better if central banks weren't given exact targets? Say targeting inflation at, say, 1-5% would be better.

2% is basically the safe spot to prevent deflation

If you target 1% and you screw up your policy you might go below 0%, which is a big no-no according to modern economics and CB policy.

The actual big question which none of the CBs want to answer is whether deflation would necessarily be bad today. Modern CB discussion on deflation is basically "Great Depression bad" and "Look at Japan".

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