Why the 2% inflation target is killing the economy - Richard Murphy

23rd October 2025

Catherine Mann of the Bank of England says inflation will stay above 2%. But what if the problem isn't inflation but is the target itself?

The 2% rule was invented in the 1990s to please markets, not to help people.

In this video, I explain why our obsession with hitting that number is crushing wages, stalling investment, and protecting the rich at the expense of everyone else.

It's time for an inflation policy that serves people, jobs, and the planet, and not financial markets.

00:00 - Catherine Mann and the 2% inflation claim
00:40 – Why the 2% target might be wrong
01:15 – The political invention of the inflation target
02:00 – Central banks’ obsession with inflation control
02:40 – No evidence that 2% inflation helps growth
03:10 – How the world has changed since the 1990s
03:45 – Inflation as adaptation and resilience
04:20 – Historical evidence: inflation returns to normal
05:00 – Interest rates as a blunt and harmful tool
05:45 – The hidden war on labour
06:20 – How high rates crush growth and investment
07:00 – Protecting assets at the expense of jobs
07:40 – Rethinking the goal: inflation that serves people
08:15 – Fiscal policy vs monetary punishment
08:55 – Building a people-focused economic policy
09:30 – Inflation targets must serve society, not markets
10:10 – Why the 2% target is harmful and outdated

TRANSCRIPT
A transcript for this video is available at: https://www.taxresearch.org.uk