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Economic Commentary

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 views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Altig, David. 2003. “What Is the Right Inflation Rate?” Federal Reserve Bank of Cleveland, Economic Commentary 9/15/2003.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International