Is the Central Banks 5% Inflation Target too High? #shorts

Ajouté : 2026-05-28

[00:00:00]So, they are completely responsible for inflation. In our view, inflation of 5% is still too high. Of course, in the in the act, they can their target is 5%, but in our view at least it has to be at 2% because depreciating the Sorry for just saying that. Actually, it's the thing is it's even though it's 5% it's 5 to 7% there's a range. 3 to 7%.

[00:00:22]So, they are they're targeting the mid-range at 5%, but they can go up to 7. 7% Yeah. So, our view is at least it has to be at 2% not because of anything else, you know, on first principles thinking, money is something store your you know, money is a form that you store your value.

[00:00:39]So, that has to be restored. I mean, you cannot have a situation that after you store it after because you get that exact value and after 1 year where you realize that it has depreciated by 5% or 7% it's not fair by the person who stored that.

[00:00:53]That's number one, but on answering your like the But but just let's stay there for a bit.

[00:01:00]Now, inflation is also connected to economic growth as well, right? So, when they're targeting 5% doesn't the central bank have very good reasons for that target?

[00:01:12]You know, because the the the from the consumer point of view, yes, you would say 2% or probably even less.

[00:01:18]But I mean, there's a larger picture of isn't the central bank factor in that in when you're when they're targeting 5%?

[00:01:26]You need actually in in our view when you actually have 2% inflation that will help more towards the growth side because when the value of the money is stored then people have confidence in the system. In terms of pricing, in terms of getting economic activity because when you otherwise when you the logic is when the currency I mean, when you depreciate the value I mean, when you have 5% inflation, so with the price increases that people will spend kind of more. Otherwise, if there's deflation that's a lot that's the other side argument from the other side. If the prices are coming down, if it's deflationary, people will not spend thinking that the prices will further come down, right?

[00:02:06]>> Uh but >> So so conversely, if if the prices are going to go up by say 5% or whatever, then people will be like, "Okay, I'll buy now and not wait for it to go up further, right?" That that that urgency is created. Urgency is created, but the challenge is also you are losing your wealth by 5% every year.

[00:02:25]Uh so that is not going to help in terms of stability point of view. So that's why they say, "Okay, you keep a margin for about 2%, which we are not saying to keep it like zero minus. Keep it 2%, but not 5% is too much because they can exceed it for 7%."