As inflation in the U.S. stabilizes around 2-3% in 2025, questions arise about the possibility of returning to the Federal Reserve's ideal target of below 2%. Inflation reflects the rate at which prices for goods and services rise, making it crucial for maintaining purchasing power. Aiming for a 2% inflation rate indicates balanced economic health. Despite the benefits of low inflation, including stable business conditions and lower interest rates, external factors like post-pandemic recovery, labor shortages, and geopolitical tensions complicate this target's achievement.
"The upside of low inflation is that it creates predictability for businesses, helps consumers save more and keeps interest rates down, fueling borrowing and investment."
"Inflation isn't just rising prices. It measures how much more expensive a set of goods and services has become over a certain period, usually a year."
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