Help me understand the following scenario:
The goal is to have inflation of 2% YoY.
The Fed has raised rates in an attempt to curb inflation so that it drops down to that mark.
Since COVID, we've seen a massive spike in inflation. According to the CPI Inflation Calculator, something that cost $100 in June of 2020 cost $118.35 in June of 2023.
That would demonstrate an inflation of 18.35% over the past three years.
That's 6.12% per year opposed to the goal of 2%.
So even when inflation makes its way down to 2% YoY, prices would still be 12.35% (18.35% actual – 6% target) higher than our goal.
So what then? We just accept that prices are 12.35% higher than they should be and move on with our lives?
Shouldn't the goal be for prices to be 6% higher than they were 3 years ago instead of 18.35% higher?
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