Simple Monetary Policy Rules
- Description: We show federal funds rates from 7 simple monetary policy rules based on 3 sets of forecasts for economic conditions.
- Why so many rules? Examining a variety of rules is helpful because there is no agreement on a single “best” rule, and different rules can sometimes generate very different values for the federal funds rate, both for the present and for the future.
- Why 3 forecasts? Looking across multiple economic forecasts helps to capture some of the uncertainty surrounding the economic outlook and, by extension, the outlook for monetary policy.
- Download our spreadsheet to customize your own rule and see all the forecasts, rules, and funds rate paths.
Forecast | Rule | Date (YYYY.Q format) | ||
---|---|---|---|---|
SPF | Taylor (1993) rule | |||
Core inflation in Taylor (1999) rule | ||||
Inertial rule | ||||
Alternative r* rule | ||||
Forward-looking rule | ||||
First-difference rule | ||||
Low weight on output gap rule | ||||
CBO | Taylor (1993) rule | |||
Core inflation in Taylor (1999) rule | ||||
Inertial rule | ||||
Alternative r* rule | ||||
Forward-looking rule | ||||
First-difference rule | ||||
Low weight on output gap rule | ||||
FRBC BVAR | Taylor (1993) rule | |||
Core inflation in Taylor (1999) rule | ||||
Inertial rule | ||||
Alternative r* rule | ||||
Forward-looking rule | ||||
First-difference rule | ||||
Low weight on output gap rule | ||||
Summary | Maximum | |||
Median | ||||
Minimum |