Good monetary policy under the Taylor rule means the central bank's interest rate adjusts by a sufficient (quantifiable) amount when inflation or GDP rises or falls — rising at least as much as inflation increases, and being cut by specified amounts during recessions — which allows specific measurement and comparison against actual policy.
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Speaker
John TaylorEvidence Quote
“The Taylor rule shows that good monetary policy is one in which the interest rate set by the central bank adjusts by a sufficient amount when interest rate Quentin excuse me when inflation Rises or when GDP Rises or Falls and so if inflation begins to pick up the interest rate should rise by at least as much of that inflation”
Created: 6/15/2026, 9:20:12 AM
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