Common 2-3% Range for Inflation Targets

The central bank of Country A has set an annual inflation target of 2%, while the central bank of neighboring Country B, which has a similar economic structure, has set a target of 2.5%. Which of the following principles best explains why both of these targets can be considered valid monetary policy choices?

Evaluating the Rationale for Inflation Targets

A precise inflation target of 2.0% is widely adopted by central banks because economic models have definitively proven it to be the mathematically optimal rate for maximizing long-term economic growth.

Rationale for Inflation Target Variation

Analyzing a Central Banker's Justification