The 2% Inflation Target

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New Zealand was the first country to set a formal inflation target in 1989. When that country saw success, other countries started to adopt similar rules. So we hear that 2% target a lot, but where did it come from and why are central banks shooting for it? To help answer some of these questions is FT's Colby Smith.

Economists say the UK will face one of the worst recessions and weakest recoveries in the G7 in the coming year, and The Netherlands may be the first country to hit the limits of growth. Plus, the FT’s Colby Smith explains how the Federal Reserve and other central banks settled on a 2 per cent inflation rate target.

Mentioned in this podcast:

UK faces worst and longest recession in G7, say economists

The Netherlands may be the first country to hit the limits of growth

Opinion: It is time to revisit the 2% inflation target

FT editorial board: Inflation targeting and the 2 per cent goal

The FT News Briefing is produced by Fiona Symon, Sonja Hutson and Marc Filippino. The show’s editor is Jess Smith. Additional help by Peter Barber, Michael Lello, David da Silva and Gavin Kallmann. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.

Read a transcript of this episode on FT.com

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