How 2% became the target for inflation : Planet Money If the Fed had a mantra to go along with its mandate, it might well be "two percent." We look into how that became the target inflation rate, why some economists are calling for a change and how the inflation rate becomes unanchored.

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Two Indicators: The 2% inflation target

Two Indicators: The 2% inflation target

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KAREN BLEIER/AFP via Getty Images
This 23 September, 2007 photo shows the front of the Marriner S. Eccles US Federal Reserve Building in Washington, DC. Marriner Stoddard Eccles (1890 ? 1977) was a US banker, economist, and Chairman of the Federal Reserve. AFP PHOTO/Karen BLEIER (Photo credit should read KAREN BLEIER/AFP via Getty Images)
KAREN BLEIER/AFP via Getty Images

If the Federal Reserve had a mantra to go along with its mandate, it might well be "two percent." That number, the Fed's longtime inflation target, has been adopted by many other central banks around the world. It's become almost synonymous with smooth, healthy economic growth.

But how did two percent become the Fed's target? For an organization staffed with mathematicians and economists, the answer is surprisingly unsophisticated.

Join us to hear about the history behind the number, why some economists are calling for a change, and what happens when the inflation rate becomes unanchored.

This episode was produced by Nicky Ouellet and Jamila Huxtable, and engineered by Maggie Luthar. Sierra Juarez checked the facts and Kate Concannon edited the show.

Music: "Knee 5," "One," "Three Is A Magic Number," "Reel A," "Too Much Is Not Enough," and "What Shall We Do With A Drunken Sailor."

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