Subject: Re: OT Fed/Macro/Rates
The 2% target taken by the Fed (and a number of other central banks) is chosen because they think it best serves the long run stability and prosperity of an economy. It's arrived at by starting with price stability, but then adding just enough slippage to help with the real problems caused by nominal price stickiness.

Not really. It was actually invented in NZ.

More than 30 years ago, some relatively youthful central bank and Treasury economists in New Zealand were grappling with how to bring two decades of double-digit inflation under control in an economy less than 1% the size of its U.S. counterpart.
What if, they asked, they just told everyone the rate should be much lower - say roughly 2% - and then aim for that?
"It was a bit of a shock to everyone, I think," said Roger Douglas, the Labour Party finance minister at the time who worked with the Treasury and Reserve Bank of New Zealand (RBNZ) to pioneer the policy. "I just announced it was gonna be 2%, and it sort of stuck.

Like that, inflation targeting was born."


https://www.reuters.com/market...