Season 1 · Episode 319
What's the right level of inflation?
Why do central banks target a 2% inflation rate? What if they targeted a higher amount? Would it make any difference?
Debunking Economics - the podcast · Steve Keen & Phil Dobbie
October 5, 202239m 51s
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Show Notes
The world is living in fear of rising inflation. Central banks are trying to combat it by pushing up interest rates, which means people also now fear how much their mortgage is going to cost. So, are they making matters better or just adding to the problem? This week Phil Dobbie asks Steve Keen if inflation is as big a problem as central banks make out, and whether hiking interest rates will fix the problem this time round. And why a 2% inflation target. It’s the aim of most central banks to get inflation down to that level, but it sounds like it had a rather haphazard, unscientific origin. If they changed the target to, say, 4 percent, what would happen? More to the point, what would happen if these banks did nothing at all?
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