Why do we set the target inflation to 2% not 0%?

I know deflation is bad as it can trigger a deflationary vicious cycle that could potentially lead to a depression. However, why do many governments around the world set a positive target inflation? For instance, the United States Fed sets the target inflation at 2%. Why 2 not 0 when most things/resources in life and on Earth are finite?

Posted Aug 31, 2026, 2:30 AM UTC

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