U.S. Taylor Rule Calculator

Estimate short-term interest rates as economic conditions change.

Using a popular tool of monetary policy analysis, our Taylor Rule Calculator lets you estimate where short-term interest rates should move as economic conditions change. Developed by Stanford economist John Taylor, the Taylor rule computes an optimal fed funds rate using the real interest rate, the desired level of inflation, and deviations in inflation and economic output from their targets.

By making assumptions on future unemployment and inflation, you can use both the forward-looking Taylor rule as well as an adaptation of the rule used by Moody's Analytics to show the Fed's possible course of action. Read more.

*Note about the Moody's Analytics Taylor Rule: The Taylor rule has been modified in a number of ways in the economics literature to incorporate various features. The Moody's Analytics Taylor rule incorporates the CBOE volatility index as a measure of financial market conditions. Also, we substitute the core PCE for the core CPI.

Forward-Looking Rule

a. Select Fed's inflation target

b. Select inflation rate one year ahead

c. Select NAIRU
(Nonaccelerating inflation rate of unemployment)


d. Select unemployment rate one year ahead


Forecast Fed Funds Rate: {{forwfrfed | number:2}}
Original Taylor Rule Estimate: {{forwestimate | number:2}}
Moody's Analytics Taylor Rule Estimate: {{forwmaestimate | number:2}}

Traditional Rule

a. Select Fed's inflation target

b. Select NAIRU
(Nonaccelerating inflation rate of unemployment)



Current Fed Funds Rate: {{tradrfed | number:2}}
Original Taylor Rule Estimate: {{tradestimate | number:2}}
Moody's Analytics Taylor Rule Estimate: {{tradmaestimate | number:2}}

Taylor Rule vs. Moody's Analytics Baseline Forecast

Using Moody's Analytics forecasts for inflation and unemployment, you can see what the Taylor rule prescribes for short-term interest rates over the next several years. This can be compared with the Moody's Analytics baseline forecast for the target fed funds rate.