Notable
NATO bombs Moscow, Russia picks a target and launches.
"The Taylor Rule"
The Taylor Rule (named for John Taylor, a macroeconomist at Stanford) is a particular example of a “cen- tral bank reaction function”—that is, a function or rule according to which the central bank sets its policy instrument as a reasonably predictable response to the state of the economy.
The US Federal Reserve operates under a dual mandate: they are required to pay attention to inflation (keep it low and stable) and also to employment (keep it as high as reasonably possible). So when we talk about the Fed reacting to the “state of the economy” we mean, primarily, to the rate of inflation and the rate of unemployment. Further, when we talk of the Fed’s “policy instrument,” these days we mean the Federal Funds rate of interest.
There are various ways of expressing the Taylor Rule, but here’s one version:
RF = c + a(π − π∗) + b(u − u∗)
http://users.wfu.edu/cottrell/ecn207/taylor-rule.pdf