- A Goldilocks economy is when growth isn't too hot, causing inflation, nor too cold, creating a recession.
- It has an ideal growth rate of between 2-3%, as measured by GDP growth.
- It also has moderately rising prices, as measured by the core inflation rate.
A Goldilocks economy is one that is neither too aggressive nor too defensive. It stays within stipulated limits of inflation and is conducive to moderate growth. The monetary policy in such economy tends to be a balanced one, i.e. neither too high interest rates that they deter industrial expansion, nor ultra low so as to boost up inflation. The phrase has been derived from a children’s story (Goldilocks and Three Children) and was first used in economics in 1992.