Low and stable inflation helps the economy operate efficiently. The Federal Open Market Committee (FOMC) judges that an annual increase in inflation of 2 percent is most consistent over the longer run with the Federal Reserve’s mandate for price stability and maximum employment.
When inflation is low and stable, individuals can hold money without having to worry that high inflation will rapidly erode their purchasing power. Moreover, households and businesses can make more accurate longer-run financial decisions about borrowing and lending and about saving and investment. Longer-term interest rates are also more likely to be moderate when inflation is low and stable—Read more at Federal Reserve. “Why does the Federal Reserve aim for 2 percent inflation over time?” 26 January 2015