Advancing a Free Society

Taylor Rule Recommends Raising Rates

Thursday, June 2, 2011

Over at Market Beat:'s inside look at the markets, Mark Gongloff reports that Standard Chartered’s David Semmens says that “Based on a strict Taylor-rule calculation, the first effective fed-funds rate increase shouldn’t come until the first quarter of 2013.”

And over at Business Insider, Art Cashin of UBS reports that Jim Brown of Premium Investor says that “the Taylor rule says the Fed funds rate should be -1.65%” suggesting the need for a QE 2.5.

But no calculations are provided in either report.

Over here at Economics One, I can report that the Taylor Rule says that the fed funds rate should now be 1 percent, and I can provide the calculations.

Continue reading John Taylor…

(photo credit: bhautikjoshi)