Taylor rule policy rate calculator

In short

The benchmark every committee is measured against.

Interactive: Taylor rule policy rateMedium

Neutral real rate r* % Current inflation % Inflation target % Output gap % Weight on inflation gap Weight on output gap

Implied policy rate: —
From the inflation gap: —
From the output gap: —
Neutral nominal rate: —
Implied real policy rate: —
Stance: —

Two of the six inputs are unobservable — the neutral rate and the output gap — and estimates of both are revised heavily after the fact. That is the rule's honest limitation and the reason no central bank follows it mechanically. Its use is as a reference point: a policy rate far from the rule invites the question of what the committee is seeing that the rule is not.

The idea behind it

This calculator belongs to Central Banks & Monetary Policy, where the mechanism it computes is explained step by step, with the formula, what each input means and where the simple model stops being right. Everything is computed in your browser; nothing you type is sent anywhere.

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The same in full — six points, and why each one matters

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