Discretionary policy

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Discretionary policy is a term used to describe macroeconomic policy based on the judgement of policymakers as opposed to reliance on rules such as the Taylor rule.

Discretionary policies are similar to "feedback-rule policies" used by the Federal Reserve to achieve price level stability. "Discretionary policies" refer to actions taken in response to changes in the economy, but they do not follow a strict set of rules, rather, they use subjective judgment to treat each situation in unique manner. In practice, most policy changes are discretionary in nature.