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The equation into words, the (original) Taylor rule predicts that the FOMC will raise the federal funds rate (tighten monetary policy) by one-half percentage point:

(1) for each percentage point that inflation rises relative to the Fed’s target, assumed to be 2%,

(2) for each percentage point that that output rises relative to its potential. if the CPI peaked at 9%, that could require an additional 3.5% of monetary policy tightening on top of the 2% neutral.

Only considering the 2021 output gap and inflation gap based on CPI and Median CORE Inflation. With the classic Taylor Rule formula methodology, the Federal Fund rate could have to be hiked to 8.5% (Median Core Inflation), EFFR 9.35%, (CPI Inflation).

However, the average trend growth of Real GDP between 2000/21 has between 2.0%, much lower than the average trend growth of 3.1%. The New Economy has been false misleading storytelling of higher productivity driven by technological advances. The facts are lower GDP growth.

according to the PCE Inflation rate measures, Inflation in the United States economy will be averaging 6%<7% with a 12 months lag.

even the trimmed mean PCE Inflation rate, excluding food/energy and trimming anything else during 2021 was rising above the 2% inflation target, while the Fed was stuck at the 0% lower bound doing QE. Shall we say, in hindsight was not a good choice?

Indeed, the trimmed mean PCE Inflation rate in 2022 with a 6 to 12 months lag, averages 4%, which requires the Federal Fund rate to hike up to 4%<4.5%. Depending on economic data and how CPI and CORE Inflation will develop in Q4 going forward.

A dog that wags its tail, more consumer spending with increasing prices and inflation are not going to be useful for monetary policy and stock markets. Stocks and earnings are not going to meet expectations without consumer spending.