đŠ Central banks typically target an inflation rate of 2%. But whatâs so special about 2%?
Partly, they target a small positive rate to avoid deflation â which can cause the economy to grind to a halt. And 2% is low enough that things shouldnât get too expensive, too fast.
Unfortunately, central banks have a terrible record of hitting this target! Your money loses value every year, and often much faster than 2%.