How 2% Became an Inflation Target: Planet Money: NPR

Karen Blair/AFP via Getty Images

Karen Blair/AFP via Getty Images

If the Federal Reserve had a slogan to go along with its mandate, it would probably be “2%.” This number is the Fed’s long-standing inflation target and has been adopted by many other central banks around the world. It has become almost synonymous with smooth, healthy economic growth.

But how did 2% become the Fed’s target? For a group of mathematicians and economists, the answer is surprisingly simple.

Join us as we learn the history behind this number, why some economists are calling for a change, and what happens when the inflation rate loses its stability.

This episode was produced by Nicky Ouellet and Jamila Huxtable and written by Maggie Luthar. Sierra Juarez fact-checked and Kate Concannon edited.

music: “Knee 5“”one“”Three is the magic number“”Scroll A“”Too much is not enough,” and”How should we treat a drunk sailor?“”.

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