Prices and Choosing a Target Inflation Rate

In Analysis by Michael Rae

The last time the Federal Reserve Bank (Fed for short) announced its inflation rate target, it was 2%. Discussing a good target rate seems almost like a joke, with inflation now running at more than 9%. What difference does a target make when the Fed misses its mark by that much?
Let’s think about it anyway.
Prices play an essential role in an economy by informing businesses and consumers about the relative cost of different purchasing options. Should you eat dinner at a more expensive restaurant you enjoy, or save some money for other things by eating at a restaurant that’s not

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