Why do central banks want inflation?

Central banks want inflation because it helps to stimulate economic growth by encouraging spending and investment. A moderate level of inflation, typically around 2%, is seen as healthy for an economy because it can help to boost employment and wages. Additionally, inflation can help to reduce the value of debt and make exports more competitive. However, if inflation becomes too high, it can lead to economic instability and harm the overall health of the economy.

The effects of inflation are often not directly felt but are played out over a long time, especially long-term investments are vulnerable to inflation.


At Horizon65, we created a mobile app that enabled you to check the effect of inflation on your savings.

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