Why are slowly increasing prices considered stability?
October 4, 2012 12:29 AM Subscribe
Why do most central banks target a small non-zero inflation rate rather than zero?
- Bank of England target is 2% CPI
- European Central Bank HICP target is "less than 2%"
- US Federal Reserve target is 2%
Why don't they all target zero if the ultimate aim of policy is actually "Price Stability" as most officially state.
posted by mary8nne to Work & Money (12 answers total) 4 users marked this as a favorite
Secondly is this background level inflation a relatively modern 20th Century thing? I have seen suggestions that during the 19th Century general inflation was essentially zero (in the UK at least). ie that the effective purchasing power of £100 was much the same in 1900 as it had been in 1800.
Was there generally inflation during the Roman Empire? Or say China or Mesopotamia? Can you recommend any books on historical inflation? or a History of Inflation / Prices