Is 2% Really the Right Inflation Target for Central Banks?

 Both the US Federal Reserve and the European Central Bank appear to be dead set on getting inflation back to their 2% target. 

But while 2% is viewed as a kind of “sweet spot” for inflation – neither so high that consumers struggle to cope, nor so low that it stifles economic dynamism – it is ultimately arbitrary, and its primacy in monetary policymaking is a relatively recent phenomenon.

In this Big Question, we ask Michael J. Boskin, John Cochrane, Brigitte Granville, and Kenneth Rogoff whether it is time to rethink the 2% target.

Project Syndicate 27 July 2023




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