Fixed-Rule Policy

DEFINITION of 'Fixed-Rule Policy'

A fiscal or monetary policy designed to be an economic goal or target of a government. A fixed-rule policy, by definition, is pursued no matter the condition of the economy, and is considered independent of the current economic state.

BREAKING DOWN 'Fixed-Rule Policy'

For example, a fixed-rule policy of any government could be that the maximum target level of inflation must be less then 5% for any given year, as measured by the consumer price index (CPI). By creating a fixed-rule policy, a government can focus on longer term goals for an economy, and provide economic direction.

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