However in order to calculate capacity utilisation it is necessary to know the trend path of output and steady-state rate of interest, 𝑟 0. Taylor (1993) suggested that a policy rule such as: 𝑟 𝑡 = 𝜋 𝑡 +0.5 𝑦 𝑡 − 𝑦 𝑡 ∗ +0.5 𝜋 𝑡 − 𝜋 0 +( 𝑟 0 − 𝜋 0 ) broadly described the behaviour of the US Federal Open Markets Committee. The Current Economic Position Expected Future Spot Rates Chart 14: UK future spot rates 5 years ahead Chart 15: US future spot rates 5 years ahead External MPC Memberġ1 Policy-Making when Output and Inflation Matter
The Current Economic Position Movements over the last three months Chart 13: Share price movements over the last three months, indexed to External MPC Member The Current Economic Position GDP and inflation forecasts Chart 10 GDP projection based on market interest rate expectations and £375 billion purchased assets Chart 11 CPI inflation projection based on market interest rate expectations and £375 billion purchased assets External MPC MemberĨ Unemployment rate The Current Economic PositionĬhart 12 Unemployment projection based on market interest rate expectations and £375 billion purchased assets External MPC Member The Current Economic Position Lending to households & PNFCs External MPC Memberĥ Supply & Productivity The Current Economic Position St Catharine’s College Cambridge 22nd October 2014 1 The Economic Outlook Dr Martin Weale External MPC Member
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