economics should, Taylor, current, interest, target

pimpineasy

2009 exam Q 5:

Taylor rule suggests that Bank of England should target a short term interest rate of 3.75% vs. current 5.5%.

What will the effect on the economy?

infinitybenzo

I think this was the one where inflation was already like 4% or something.... therefore lowering the rate almost 2% has the potential to send inflation way up....