Price stability means an inflation rate low enough that it does not significantly affect people's economic decisions.

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Price stability refers to an inflation rate that is low enough to prevent people from altering their spending and investment behavior. When prices rise rapidly, people may be inclined to spend more money in order to prevent the value of their currency from eroding. Alternatively, they may choose to save more money in order to protect themselves from inflation's negative effects. When price levels remain stable, however, people can plan and budget more effectively, and the economy can operate more efficiently.

Price Stability Means an Inflation Rate Low Enough That It