In an article in the Times, Jon Moulton stated:

"The Bank [of England] has had this [2%] inflation target for more than a decade yet it lacks any theoretical basis."

In an article in the Times, Jon Moulton stated:

"The Bank [of England] has had this [2%] inflation target for more than a decade yet it lacks any theoretical basis."

EDIT: Just in case you are interested, I have a theory about optimal inflation. If you wish money to be neutral - i.e. be a Veil over Barter then you would like money to behave as closely as possible to ordinary "stuff" that gets bought and sold. One property that the bulk of goods have is that they decay over time, i.e. they rot, rust, become obsolete etc etc. If you consider the average decay rate of "stuff" to be X% then inflation should be such that money loses its value at a rate of X% too. I'd say that the decay rate of "stuff" is generally greater than 2%, my feeling is that it is more like 5% or so.

In an article in the Times, Jon Moulton stated:

"The Bank [of England] has had this inflation target for more than a decade yet it lacks any theoretical basis."

In an article in the Times, Jon Moulton stated:

"The Bank [of England] has had this [2%] inflation target for more than a decade yet it lacks any theoretical basis."