How did 2% become the magic inflation target?
FT News Briefing
Forhecz Topher
4.4 • 1.3K Ratings
🗓️ 3 January 2023
⏱️ 11 minutes
🧾️ Download transcript
Summary
Economists say the UK will face one of the worst recessions and weakest recoveries in the G7 in the coming year, and The Netherlands may be the first country to hit the limits of growth. Plus, the FT’s Colby Smith explains how the Federal Reserve and other central banks settled on a 2 per cent inflation rate target.
Mentioned in this podcast:
UK faces worst and longest recession in G7, say economists
The Netherlands may be the first country to hit the limits of growth
Opinion: It is time to revisit the 2% inflation target
FT editorial board: Inflation targeting and the 2 per cent goal
The FT News Briefing is produced by Fiona Symon, Sonja Hutson and Marc Filippino. The show’s editor is Jess Smith. Additional help by Peter Barber, Michael Lello, David da Silva and Gavin Kallmann. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.
Read a transcript of this episode on FT.com
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Transcript
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| 0:00.0 | The FT News Briefing is supported by Equinole, the UK's energy partner. |
| 0:06.3 | Learn more at equinole.co.uk |
| 0:09.7 | Good morning from the Financial Times. |
| 0:11.2 | Today is Tuesday, January 3rd, and this is your FT News Briefing. |
| 0:18.3 | The UK may face an especially bad recession, |
| 0:21.5 | and we'll take a look at what it means for the Netherlands |
| 0:24.0 | if its economy has reached the limit of how much it can grow. |
| 0:27.6 | Plus, the Federal Reserve's New Year's resolution may sound familiar, |
| 0:31.5 | bring down inflation to 2 percent. |
| 0:34.1 | The FT's Colby Smith explains where that target came from, |
| 0:37.5 | and whether it's going to stick around. |
| 0:39.5 | I'm Mark Filipino, and here's the news you need to start your day. |
| 0:51.1 | Economists think that out of all the G7 countries facing a recession this year, |
| 0:55.2 | the UK is going to get hit the hardest. |
| 0:57.9 | The FT surveyed more than 100 UK-based economists. |
| 1:01.3 | They said not only will Britain have the worst recession, |
| 1:04.4 | but the country's recovery will take the longest. |
| 1:07.1 | Now, there are a few reasons for this. |
| 1:09.3 | The economists who were surveyed said inflation, |
| 1:11.8 | caused by the war in Ukraine, |
| 1:13.3 | will stick around in the UK longer than other G7 countries. |
| 1:17.4 | But it's been made worse by poor policy decisions. |
... |
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