During a Dec. 15 appearance on NPR’s Marketplace, Julie Smith, professor of economics, offered her views on why 2% came to be the Federal Reserve bank’s inflation target.

Julie Smith, professor of economics

Prof. Julie Smith

It turns out that, in 1990, the central bank of New Zealand aimed for 2% and the nation’s economy performed well, said Smith, a frequent guest on NPR’s flagship business news program. Other countries adopted it, although there are mixed opinions about whether the 2% target actually results in economic growth, she noted.

Listen to or read the segment.

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