Taylor rule may not remain optimal if government acts unpredictably, David Andolfatto notes

Taylor rule may not remain optimal if government acts unpredictably, David Andolfatto notes
Taylor rule optimal only with stable policy

David Andolfatto discusses the Taylor rule, describing how it generally characterizes Federal Reserve policy and can be considered optimal when the government operates sensibly.

He raises the question of whether this rule remains optimal in scenarios where government behavior is less predictable.

Andolfatto has previously reported that the PCE inflation rate reached 4.7% year-over-year in July 2026. He also noted a 1.9% month-over-month increase on an annualized basis during that period. Details can be found in his earlier post on July 2026 PCE inflation figures.

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