Second, the policy response needs a buffer to a certain extent. In order not to fall into deflation again, it is desirable to ensure that the inflation rate be positive to some extent. In general, a central bank can respond to higher inflation by raising its policy interest rate.
On the other hand, in the case of deflation, despite the central bank’s efforts to stimulate the economy, it is difficult to lower the policy interest rate substantially below 0 percent, and room for the monetary policy response as a tool for macroeconomic policy would be limited. Third, the 2 percent target is a global standard.