price level targeting

Popular Terms
The strategy for establishing a stable or preset level of pricing to ensure the consistency of price levels. Employing the use of the Consumer Price Index (CPI), price level targeting incorporates future inflation as well as the price levels in previous years to stabilize and maintain price. For this reason, many financial systems consider this practice undesirable as most believe that a small amount of inflation, normally about two percent annually, is beneficial to the economy. See also inflation targeting.


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