2% is OK, and for the economy stability is very important, because it makes long term planning and investments more predictable.
But the 2% figure is mostly arbitrary, even -1% is fine too as it generally also means low interest rates., and that makes it extremely cheap to borrow money, sometimes even free. Meaning investments don’t have to carry high interest rates to be profitable. Also people are not afraid to borrow to buy a house or car. The only ones that make less money are generally financial institutions.
IMO slight deflation and slightly negative reserve interest rates are best, because that reflects reality of increased efficiency and reduced costs of production better.
2% is OK, and for the economy stability is very important, because it makes long term planning and investments more predictable.
But the 2% figure is mostly arbitrary, even -1% is fine too as it generally also means low interest rates., and that makes it extremely cheap to borrow money, sometimes even free. Meaning investments don’t have to carry high interest rates to be profitable. Also people are not afraid to borrow to buy a house or car. The only ones that make less money are generally financial institutions.
IMO slight deflation and slightly negative reserve interest rates are best, because that reflects reality of increased efficiency and reduced costs of production better.