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What Is the Right Inflation Rate?


The primary objective of most of the world’s central banks these days is to keep inflation low, and the range of inflation rates banks find acceptable appears to be around 2.5 percent to 3.5 percent. While banks may have hit on this range through trial and error, economic theory and empirical observations suggest a good reason for it.

The primary objective of most of the world’s central banks these days is to keep inflation low, and the range of inflation rates banks find acceptable appears to be around 2.5 percent to 3.5 percent. While banks may have hit on this range through trial and error, economic theory and empirical observations suggest a good reason for it.


Suggested citation: Altig, David E., 2003. "What Is the Right Inflation Rate?" Federal Reserve Bank of Cleveland, Economic Commentary, 09.15.2003.

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