Why is it so important to get inflation down to two per cent?

from The Decibel · host The Globe and Mail

We’re all familiar with the cycle now: Inflation is too high, so central banks keep raising interest rates. The hope is to get inflation back down to 2 per cent. But why 2? If we accept that things are going to keep getting more expensive, what difference does it make if it’s 2 or 3 per cent? Or 2.8?Report on Business reporter Mark Rendell explains why we’re aiming for 2-per-cent inflation, whether that target will change and what he learned from a recent interview with Tiff Macklem, Governor of the Bank of Canada.Questions? Comments? Ideas? E-mail us at [email protected] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Episode metadata supplied by the publisher feed · Published Jul 19, 2023

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We’re all familiar with the cycle now: Inflation is too high, so central banks keep raising interest rates. The hope is to get inflation back down to 2 per cent. But why 2? If we accept that things are going to keep getting more expensive, what difference does it make if it’s 2 or 3 per cent? Or 2.8? Report on Business reporter Mark Rendell explains why we’re aiming for 2-per-cent inflation, whether that target will change and what he learned from a recent interview with Tiff Macklem, Governor of the Bank of Canada.