The Federal Reserve’s 2% inflation target has been the benchmark for a healthy economy, but recent evidence is showing that higher levels of inflation may be just as beneficial. Inflation measures how much prices rise over time and is often seen as an indicator of economic health. The Fed wants to keep it at or below 2%, however, some economists believe that this target could be too low for the current economic environment.
Higher levels of inflation can help to stimulate spending in an economy by reducing the value of money over time and encouraging people to spend their cash sooner rather than later before its purchasing power decreases further. This increased spending can lead to more jobs being created and wages rising which will benefit both businesses and consumers alike. Additionally, higher rates of inflation make it easier for governments to pay back debt because they can do so with cheaper dollars than when they borrowed them in the first place due to their decreased value relative to other currencies or assets like gold or silver.
Ultimately, while keeping a lid on runaway price increases should remain a priority for central bankers around the world; there may also be benefits from allowing slightly higher rates of inflation if done responsibly without destabilizing markets or creating bubbles within certain sectors such as housing prices etc…
Read more at CNBC
By
