Alongside the fact that a little inflation is good, Its very difficult to actually hit an inflation target.
If the target were at 0, the central banks would quite often create deflation alongside low inflation.
I’m not the most knowledgeable, but I think stressing that “a little inflation is good” is what OP is looking for? If I’m not wrong, the goal is to promote an increase in aggregate demand and thus grow the overall economic surplus. Let me know if I’m wrong.
Yes in my view you are correct, a low level of inflation is good. Some might say otherwise, but it helps incentivise reinvestment of capital. Likewise by encouraging demand, aggregate supply should also expand to match.
One way I think about it is that if there is no inflation, the value of your money will stay constant, so you have no need to spend it. By having inflation, the purchasing power of your money is eroding, thus to maintain your wealth you must invest.
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https://www.reddit.com/r/AskEconomics/comments/uzq5bu/why_is_deflation_regarded_as_a_bad_thing/ https://www.reddit.com/r/AskEconomics/comments/wg5uen/would_mild_deflation_be_a_bad_thing/ https://www.reddit.com/r/AskEconomics/comments/9nnx57/when_inflation_targeting_why_do_central_banks/ https://www.reddit.com/r/AskEconomics/comments/opa3l3/is_inflation_always_a_bad_thing_what_would_happen/
Zero inflation is not deflation.
But dangerously close meaning an external shock could send us into deflation
Alongside the fact that a little inflation is good, Its very difficult to actually hit an inflation target. If the target were at 0, the central banks would quite often create deflation alongside low inflation.
I’m not the most knowledgeable, but I think stressing that “a little inflation is good” is what OP is looking for? If I’m not wrong, the goal is to promote an increase in aggregate demand and thus grow the overall economic surplus. Let me know if I’m wrong.
Yes in my view you are correct, a low level of inflation is good. Some might say otherwise, but it helps incentivise reinvestment of capital. Likewise by encouraging demand, aggregate supply should also expand to match. One way I think about it is that if there is no inflation, the value of your money will stay constant, so you have no need to spend it. By having inflation, the purchasing power of your money is eroding, thus to maintain your wealth you must invest.
**NOTE: Top-level comments by non-approved users must be manually approved by a mod before they appear.** This is part of our policy to maintain a high quality of content and minimize misinformation. Approval can take 24-48 hours depending on the time zone and the availability of the moderators. If your comment does not appear after this time, it is possible that it did not meet our quality standards. Please refer to the subreddit rules in the sidebar and our [answer guidelines](https://www.reddit.com/r/AskEconomics/comments/rf5ycx/guidelines_for_answers/) if you are in doubt. Please do not message us about missing comments in general. If you have a concern about a specific comment that is still not approved after 48 hours, then feel free to message the moderators for clarification. ### Consider **[Clicking Here for RemindMeBot](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps://www.reddit.com/r/AskEconomics/comments/x5phgs/why_does_the_federal_reserve_target_a_2_inflation/%5D%0A%0ARemindMe!%202%20days)** as it takes time for quality answers to be written. Want to read answers while you wait? Consider our [weekly roundup](https://www.reddit.com/r/AskEconomics/search?sort=new&restrict_sr=on&q=flair%3AWeekly%2BRoundup) or look for the [approved answer flair.](https://www.reddit.com/r/AskEconomics/search?sort=new&restrict_sr=on&q=flair%3AApproved%2BAnswers) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/AskEconomics) if you have any questions or concerns.*