The 2% inflation target is key to the Federal Reserve’s vision for stable prices. But, where exactly did this 2% inflation goal originate? New Zealand.

In the late 1980s, the country faced high inflation when one economist proposed, ’Why don’t we just have an inflation target?” U.S. declared its 2% inflation target in 2012.

Canada, Australia, Japan and Israel are among the many economies that include 2% in their inflation rate targets, according to the International Monetary Fund.

Watch the video above to learn more about why some economists argue for changing the target, lower or higher, and whether it may change anytime soon.

Produced by
Andrea Miller
Graphics by
Christina Locopo
Supervising Producer
Lindsey Jacobson

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What’s So Special About 2% Inflation?