Taylor interest rate rule
Money › Banking Monetary Policy Rules, Interest Rates, and Taylor's Rule. Monetary policy is the guide that central banks use to manage money, credit, and interest rates in the economy to achieve its economic goals. A primary purpose of a central bank is to promote growth and restrict inflation.The monetary tools used to achieve these objectives involve changing the size of the monetary base Taylor's rule is a formula developed by Stanford economist John Taylor. It was designed to provide "recommendations" for how a central bank like the Federal Reserve should set short-term interest rates as economic conditions change to achieve both its short-run goal for stabilizing the economy and its long-run goal for inflation. The Taylor rule, created by John Taylor, an economist at Stanford University, is a principle used in the management of interest rates. For example, central banks use the rule to make estimates of