Friedman’s rule

Friedman's rule is an economic guideline suggesting that a country should set its central bank’s inflation rate equal to the real interest rate (the return on savings after inflation). This means allowing prices to grow at a predictable, steady rate that matches the return investors expect, preventing excessive inflation or deflation. By doing so, it helps maintain stable prices and encourages consistent spending and investment, promoting a healthy economy. Essentially, Friedman’s rule advocates for a small, steady inflation rate that aligns with the natural return on savings, fostering economic stability over time.